- JPMorgan cuts Caterpillar (CAT +0.7%) to Neutral from Overweight.
- "What concerns us is the decremental margin in construction of 47% on weak pricing and mix and its guidance of 30% for the company in FY13," analyst Ann Duignan says.
- She continues: "In our view, costs are not coming out fast enough, particularly in Resource, which will likely remain a headwind in FY14. Additionally, oil prices are trending down, a new risk to Power Systems into 2014 which is by far its most profitable segment."
- Price target cut to $90 from $105.
- On the CC, Duignan pushed management pretty hard regarding the 25% pull through: "I mean we still missed the goal... which you’ve been pretty adamant you were going to meet, and we missed it by a longshot this quarter. Should we take away from that that you’re just not moving fast enough?" Here's CEO Doug Oberhelman responding: "Losing 11B off the top-line in a year is pretty [and] we’ve taken a lot of cost out of it to help that but it’s just happened pretty quick. But my expectation hasn’t changed, I will tell you that." (transcript)
JPMorgan cuts Caterpillar to Neutral
Oct 24 2013, 11:31 ET