(CercleFinance.com) – The title Caterpillar accuses Monday one of the sharpest declines of the Dow Jones index, penalized by a lowering of the advice of UBS which evokes a profile risk / return well balanced at current levels.
Around 11:30 a.m. (New York time), the action of the American construction machinery giant fell 1.1%, while the Dow fell at the same time around 0.2%.
Analysts at the Swiss bank this morning lowered their advice on Caterpillar to ‘neutral’ against ‘buy’ previously, while raising their target price from 225 to 230 dollars.
“Our theory based on a positive inflection at the level of the margins has indeed materialized and we continue to envisage a favorable trajectory for the margins as well as for the results from now on”, they explain in a note.
“Despite this, with multiples tending to flatten out as interest rates rise, the current valuation presents a more balanced risk/reward dynamic in our view,” they add.
UBS recalls that the American group improved its margin by 2.8 points in the third quarter, on the basis of an 11% growth in its volumes, a dynamic which should continue in the fourth quarter.
UBS analysts believe that the recent rebound of the title has also undermined the bullish potential of the action.
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