Blue Chip Boosted by Lofty Baird Bull Note

The firm also raised its price target to $220 from $206

Deputy Editor
Dec 30, 2020 at 10:43 AM
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Caterpillar Inc (NYSE:CAT) is up 3% to trade at $182.03, making it the top performer on the Dow at last check. Today's pop comes after Baird named the company a "top idea for 2021," and raised its price target to $220 from $206. The firm sees a similar setup to the company's 2010 and 2017, in which the shares outperformed by 50%, and cited the likelihood of accelerating retail sales and relative earnings growth. 

On the charts, CAT is nearing its Dec. 4 all-time high of $183.81, which it rose to after steadily climbing since mid-May with help from the 60-day moving average. Year-to-date, the equity is up 23.1%. 

There is plenty of space for upgrades amongst the brokerage bunch, with 10 of the 15 analysts in coverage carrying a "hold" or worse rating. Plus, the 12-month consensus price target of $174.45 is a 4% discount to current levels. 

Meanwhile, the options pits are booming, So far today, 17,000 calls and 6,968 puts have crossed the tape, which is five times what's typically seen at this point. The January 2021 192.50-strike call is the most popular, followed by the weekly 12/31 180-strike call, with new positions being opened at the latter. 

These options are well-priced at the moment, too, as per CAT's Schaeffer's Volatility Index (SVI) of 29% stands higher than just 9% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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