Caterpillar, a stock that has been struggling for several quarters, was upgraded by forecasters and grading agencies on Wednesday, but that didn’t lead to much in trading shares. According to Barron’s, investors seem to have left construction equipment companies for dead.
Bank of America analyst Ross Gilardi upgraded two stocks, Caterpillar and Herc. Caterpillar had been listed as SELL and was upgraded to HOLD. Not an enthusiastic affirmation, but definitely a step in the right direction for the famed equipment company. The reason for the upgrade was because the quarterly construction dealer survey was “better than feared” but added that there is “still plenty to worry about.” He placed his valuation of the stock at $135 a share, up from $95, but even with that endorsement, shares only budged 0.4%.
Herc, on the other hand, was upgraded from HOLD to BUY, and he increased the target price from $24 to $38. It is an optimistic change for the stock that had dived 41% in the last year, and Wall Street didn’t jump at the change. Just like Caterpillar, trading was very low. Herc only grew 0.2% following the announcement.
According to Barron’s, “Usually stocks move on upgrades, especially upgrades to Buy. The muted move illustrates that investors just aren’t interested in construction stocks these days. Consider the S&P 500 is about 7% away from its 52-week high. The Dow Jones Industrial Average is about 13% away from the comparable high. Cat and Herc, meanwhile, are 15% and 43% away from their comparable marks.”