Caterpillar Stock Loses Early Morning Gains on Disappointing Sales

Puts have been popular, too

Managing Editor
Feb 13, 2020 at 11:09 AM
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Construction equipment name Caterpillar Inc. (NYSE:CAT) was seeing a modest lift this morning after receiving a fresh bull note out of Goldman Sachs. The brokerage firm upgraded CAT to "buy" from "neutral," citing an end to the U.S. machinery recession through tightening capacity utilization, inventories and backlog approaches. However, the stock has reversed since, now 0.3% lower at $131.29, after the company said its three-month rolling sales for Latin America are down 2%, and its world retail sales were down 7%.

Heading into today analysts were mixed, with nine sporting a "hold," three a "strong sell," and the remaining four a "strong buy." Meanwhile, CAT's average 12-month price target of $147.14 is optimistic, coming in 5.9% above current trading levels.

In the options pits sentiment is leaning toward puts, with data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing the blue chip with a 10-day put/call volume ratio of 1.17. This ranks in the 78th annual percentile, meaning puts have been purchased over calls at a faster-than-usual clip.

No matter the stance, options premiums look affordable on CAT at the moment. The security's Schaeffer's Volatility Index (SVI) of 21% sits in the 9th percentile of its annual range. This means short-term options are pricing in fairly low volatility expectations right now.

On the charts, Caterpillar stock has had a volatile 12 months. Over the past six the equity has added 20.5%, and still remains above the recently supportive 320-day moving average. However, despite its recent improvement, CAT remains 12.7% off its early January peak.


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