Caterpillar's position has become more resilient amid margin recovery

Analysts at UBS revised their rating on Caterpillar from "Buy" to "Neutral," raising their target price from $225 to $230.

According to analysts, as a result of the rebound in margins, UBS views the company's risk-reward ratio as more balanced.

The company's analysts said their forecast of a positive margin reversal is justified. They also noted that they continue to see a positive trajectory for margin and earnings growth.

CAT showed segment-level profitability growth of about 11% and is forecasting higher margins in Q4.

Analysts expect sales and profitability growth to continue through 2024, and they also said the company is currently ahead of consensus EPS for 2024 by about 4% per share. However, the stock's recent volatility has narrowed the upside potential. They concluded by stressing that they would revise their rating should the stock bounce back without a significant change in the fundamentals.