MW Caterpillar's stock is now a buy as tariff deals should boost revenue, analyst says

By Steve Gelsi

Bulldozer and dump-truck maker's stock rises after Baird upgrades to outperform from neutral

Caterpillar Inc.'s stock rose Tuesday after the world's largest manufacturer of earth-moving machinery drew an upgrade to outperform from neutral at Baird, on expectations for a "revenue tailwind" ahead.

Baird analyst Mircea Dobre said the agreement between the U.S. and China to temporarily suspend tariffs would help Caterpillar. The move by the two governments ignited a big rally in the stock market on Monday.

The "trade détente" between the countries is a positive for the stock, given that Caterpillar had warned of a potential impact of $250 million to $350 million per quarter from tariffs, Dobre said.

"De-escalation with China lowers the cost drag [for Caterpillar]," Dobre wrote in a research note. "In general, however, removing trade-related unknowns should allow for improved visibility for customers looking to invest/deploy capital."

Dobre boosted Caterpillar's price target to $395 a share from $309 previously.

Caterpillar's stock $(CAT)$ was up by 3.5% to $354.61 a share on Tuesday, making it the second-biggest gainer among the 30 stocks in the Dow Jones Industrial Average DJIA.

"A combination of lower-than-normal seasonal dealer inventory build, much better-than-expected orders/backlog, and stabilization in dealer retail sales all [point] to potential fundamental improvement into 2026," Dobre said.

The current year will likely mark a low point for Caterpillar's earnings, followed by a boost from lower dealer inventories that should switch to a "revenue/production tailwind" as early as the fourth quarter of 2025 and into the coming year, he added.

Including Tuesday's moves, Caterpillar's stock was down 2.2% in 2025 while the Dow Jones Industrial Average was lower by 0.8%.

-Steve Gelsi

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May 13, 2025 13:57 ET (17:57 GMT)

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