CAT Brushes Off Downgrade, Drop in Sales

The company's global machines retail sales dropped 23% on a three-month rolling basis in May

Deputy Editor
Jun 12, 2020 at 10:38 AM
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The shares of Caterpillar Inc. (NYSE:CAT) are up 2.8% at $124.95 at last check, despite receiving a downgrade from BMO to "market perform" from "outperform." The analyst in coverage expects a challenging recovery for CAT due to customers' financial constraints. Furthermore, CAT announced that global machines retail sales were down 23% on a three-month rolling basis in May, more specifically, down 36% in North America. 

With yesterday's 8.2% slide captured by the 20-day moving average, CAT is now hovering below the $125 mark -- a level serving as both support and resistance during the past year of trading. So far in 2020, the stock has shed 15.4%.

Analysts are bearish on Caterpillar, with 11 out of 15 sporting a "hold" or worse  rating, and only four carrying a "strong buy." Meanwhile, the 12-month consensus price target of $126.47 is just a chip-shot away from current levels. 

Meanwhile, short interest is falling off, down 10.71% during the last reporting period. These 8.25 million shares sold short now account for 1.53% of CAT's available float, or would take a day and a half to cover at the stock's average pace of trading. 

Also worth noting, CAT's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 84 out of 100, meaning Caterpillar stock has tended to exceed options traders' volatility expectations during the past year.


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