Caterpillar shows mixed signals as analysts bet on positive earnings

on Jul 27, 2022
  • Analysts expect CAT’s earnings per share to jump 15% in Q2.
  • Wall Street has assigned the stock a ‘moderate buy’ rating.
  • CAT faces resistance at $194, with indicators showing bearish pressure.

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Caterpillar, Inc. (NYSE:CAT) is projected to post rosy earnings in Q2 on August 2. Zacks consensus EPS forecast on the stock is at $2.99, a 15% increase. That compares to $2.6 reported last year.

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The positive sentiment on Caterpillar is yet to excite Wall Street. The analysts hold a consensus moderate buy for the stock. The analysts place the highest price target at $282 and a low of $142. The stock currently trades at $182.

A broader look at Caterpillar, Inc. shows that the stock is trading 12% lower year-to-date. The level is down from the highest level of $237 this year in April. The sell-off reflects the challenging global economy. A high inflation rate is pushing consumers to cut spending on heavy equipment and machinery.

Like most industrial stocks, CAT is a victim of the global energy crisis. The problem is largely brought about by the political conflicts in Ukraine. Moreover, the supply chain challenges are bound to subdue demand and the revenue growth. With sectors like mining also suffering from the energy crisis, Caterpillar is not out of the woods yet.

CAT faces resistance at $194 amid bearish pressure 

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Source: TradingView

A snapshot of the technical outlook shows mixed signals in CAT. The stock found support at $168 and is showing bullish signals from the weekly chart. However, CAT remains bearish below the $194 resistance level.

MACD indicator is looking exceedingly bearish, with the stock trading below key moving averages. Keeping that in mind, CAT must break above the $194 resistance level if we are to see any bull run.

Concluding thoughts

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In a nutshell, the true position of CAT will be seen when the earnings report is released. Positive results will see more buyers jump in, and the reverse is true. While earnings could cause short-term volatility, investors should also be keen on macroeconomic factors.


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