MAC: Mines and Communities

Giant Caterpillar is on a downward crawl

Published by MAC on 2012-07-24
Source: (2012-07-18)

The world's leading producer of heavy mining equipment has seen its investment ratings downgraded by around a third in the past week.

Among those who no longer have confidence in Caterpillar is US investment firm MSCI. 

Last month MSCI ejected Caterpillar from its ethical index, for providing machines to the Israeli regime that are used to demolish Palestinian homes.

Human rights groups have been demanding such disinvestment for more than five years: Protesters force Caterpillar to cut annual meeting short

Dark period for Caterpillar: downgraded from buy to hold

Cecilia Jamasmie

18 July 2012

Global securities and investment banking group Jefferies downgraded Caterpillar from a "buy" to a "hold" rating, with a price target of $85.00, in a report released on Wednesday.

The giant producer of construction and mining equipment saw its price target fall from $130.00 to $85.00, driven mainly by a drop in the construction markets outside of the USA, but the research analysts also took into account the weaker outlook for EAME, Latin America and mining worldwide.

It's been a tough month for the machinery maker. In early July, Wells Fargo removed the company from its priority stock list, reiterating an "outperform" rating on shares of Caterpillar in a research note to investors.

Last Wednesday, analysts at Longbow Research downgraded shares of Caterpillar from a "buy" rating to a "neutral" rating in a note to investors. Separately, analysts at Credit Suisse cut their price target on shares of Caterpillar to $120.00 in a research note to investors on Friday, July 13th.

Caterpillar was also removed from the socially responsible share index, managed by US investment firm MSCI, early this month over Israeli use of Caterpillar made bulldozers for demolition in Palestine.

MSCI's decision spurred TIAA-CREF, a US mutual fund giant, to withdraw $72 million in Caterpillar shares from its "Social Choice" Fund, which tracks one of MSCI's indexes.

The earth-moving equipment maker was not the only one affected by Jefferies & Co report. The firm also cut its ratings and targets on a number of U.S. machinery companies, including Eaton Corp, CNH Global, Kennametal, Parker Hannifin and Titan International.


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