- Bernstein updated ratings for three Machinery stocks, believing that the concerns about the end of the machinery cycle in 2022 are "overdone" and sees an uneven sector setup into 2022.
- Bernstein analyst Chad Dillard upgraded Caterpillar Inc. (NYSE:CAT) to Outperform from Market Perform with a $240 price target, implying an upside of 19%.
- He thinks Caterpillar should be the biggest beneficiary of the looser monetary policy in China, with the Street also not baking in steel tailwind, which could be $0.85 EPS accretive in 2022.
- The analyst believes expectations for Caterpillar are "low" and that it is an earlier cycle stock in a mid-cycle sector.
- The analyst downgraded AGCO Corp (NYSE:AGCO) to Market Perform from Outperform and lowered the price to $127 (an upside of 13%), from $177.
- The analyst argued that 90% of AGCO's end markets are at their peak, with North America small and large ag and Europe exiting 2022 above historical peaks. Also, farm economics are weakening, and restocking will only be a modest tailwind for AGCO.
- Dillard thinks EPS beats will not get rewarded since AGCO is over-earning and believes incremental margin recovery may be more subdued than peers.
- Additionally, the analyst upgraded PACCAR Inc (NASDAQ:PCAR) to Outperform from Market Perform with a $98 price target.
- Price Action: CAT shares are trading higher by 1.57% at $201.43, PCAR higher by 0.88% at $84.11, and AGCO lower by 1.62% at $112.29 on the last check Wednesday.
