Caterpillar Q3 Miss Shows 'Just a Glimpse" Into Downside Risk, Morgan Stanley Says

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Caterpillar's (CAT) Q3 results showed "just a glimpse into the downside risk ahead," Morgan Stanley said Thursday in a report.

The earnings miss showed "signs of decelerating fundamentals across the business" including softer retail sales and lower pricing," the report said.

Morgan Stanley cut Caterpillar's price target to $330 from $332 and kept its underweight rating.

"While earnings softened more than expected, we think the worst has yet to come" as the company statement "bolsters our concerns that consensus earnings revisions are likely to remain negative and that 2025 expectations remain overly optimistic," the report said.

Dealer inventory destocking. expected to start in Q4 with reductions, may persist into 2025, Morgan Stanley said.

"Given much of what we heard from other construction related companies these past two weeks, we suspect that construction activity is unlikely to rebound until 2H (and perhaps not materially until 2026)," the report said.

Caterpillar shares fell 1.1% in recent trading Thursday.

Price: 374.94, Change: -4.30, Percent Change: -1.13

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