Caterpillar, Deere Stocks Rise on Upbeat China Buzz

Shares of both stocks have moved back into positive year-to-date territory

May 21, 2018 at 9:35 AM
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Shares of heavy machinery giants Caterpillar Inc. (NYSE:CAT) and Deere & Company (NYSE:DE) are trading notably higher this morning. We'll take a closer look at CAT and DE stocks below to see what's behind the moves and how investors have been approaching each company.

Bull Note, China Talks Lift CAT

Caterpillar is up 2.5% this morning at $159.60, after J.P. Morgan Securities upped its price target to $180 from $176 based on the belief growth in the company's Resource Industries business will lead to higher earnings. The seemingly upbeat headlines on trade talks with China are surely helping, as well. At its current perch, CAT stock is back in the black on a year-to-date basis, pushing higher since bouncing from the 200-day moving average early this month.

Most analysts are already bullish on the equity, with 11 of 20 calling it a "buy" or "strong buy," and the average 12-month price target is $172.48. As for recent options activity, the June 145 put saw the largest increase in open interest during the past 10 days, where a mix of buy- and sell-to-open activity took place.

Trump Tweet Helps DE Shares

Deere stock is up 2.1% at $158.50, after President Donald Trump this morning tweeted that China is buying "massive amounts" of farm and agricultural equipment from the U.S. This comes after DE shares rose almost 6% on Friday following the fiscal second-quarter earnings release, with investors applauding the company's plans to increase prices. That post-earnings move put the equity above the 50-day moving average for the first time in roughly two months, and today's rise has DE back atop its year-to-date breakeven point.

Of the 16 brokerage firms tracking the security, 11 say it's a "buy" or "strong buy," and the average 12-month price target is $179.05. Meanwhile, peak open interest resides at the June 155 call, where the majority of positions were bought to open. 


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