CAT Stock Sinks After Denying Annual Salary Increases

Citigroup slashed its price target on CAT to $125

by Lillian Currens

Published on Apr 1, 2020 at 10:17 AM

Caterpillar Inc. (NYSE:CAT) stock's recent rally is reversing course this morning, down 3.7% at $116.04 at last check.  The company said it would not give annual salary increases to employees this year in an effort to tighten costs and combat the economic hit it's taken during the coronavirus pandemic. CAT added that it would not pay out bonuses to its employees next year, either.

Not helping CAT's case, Citigroup came in with a price target cut to $125 from $130 this morning. Coming into today, CAT's consensus 12-month price target of $134 sat at a 15.5% premium to last night's close. Most analysts have been cautious on the stock, though. Only four call the blue chip a "strong buy," compared to nine that say "hold," and two deeming CAT a "strong sell."

The options pits are echoing this pessimistic sentiment. CAT sports a 10-day put/call volume ratio of 1.67 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 88% of all other readings from the past year, suggesting a much healthier appetite for long puts than usual. 

While the security is slipping from the one-month peak of $116.91 it notched yesterday, it's still managing to stay afloat atop the 30-day moving average, marking CAT's second day north of the trendline since mid-January. Despite this recent rally, the Dow component is still off 23.3% for the year. 

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Google Postpones Android Reveal, "Now is Not the Time to Celebrate"
"Now is not the time to celebrate," Google said in a message on its website
ZNGA Zooms to 8-Year High on Billion-Dollar Deal
ZNGA is planning to buy Peak for $1.8 billion
Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....