Analysts are Cutting Price Targets of These 5 Stocks

1. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 62 

It is somewhat surprising that Caterpillar Inc. (NYSE:CAT), an industrial manufacturing stock, has slumped recently in light of the successful regulatory passage of a $2 trillion plan by the US President to jumpstart American manufacturing. The firm is ranked first on our list of 10 stocks that analysts are cutting price targets of. Perhaps one reason the stock has pulled back in recent weeks is the increase in prices of iron ore and other metals as China cracks down on the mining industry in the country. 

Evercore ISI analyst David Raso kept an Outperform rating on Caterpillar Inc. (NYSE:CAT) stock on October 14 but lowered the price target to $257 from $291, highlighting the supply chain problems that were affecting the business of the company. 

Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Caterpillar Inc. (NYSE:CAT) with 10 million shares worth more than $2.2 billion. 

In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:

“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”

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