Caterpillar’s stock declines after Morgan Stanley downgrade

Caterpillar’s (NYSE:CAT) shares fell 2.5% in premarket trading Monday after analysts at financial-services firm Morgan Stanley downgraded the maker of heavy equipment to Underweight from a previous investment rating of Equal weight.

“While we have been cautious on U.S. non-residential construction activity all year long and increasingly cautious on Caterpillar (CAT) earnings, we now see rising evidence of a potential de-stocking downturn for U.S. construction equipment,” Angel Castillo, analyst at Morgan Stanley, said in an October 14 report. “We see even more risk of downward earnings revisions for Caterpillar (CAT).”

Morgan Stanley cut its price target on Caterpillar (CAT) to $332 a share from $349 a share previously, based on an unchanged multiple of 16 times applied to 2025 earnings instead of 2024 earnings estimates.