Caterpillar Inc (NYSE:CAT) is well positioned to benefit from the trend of data center operators increasingly looking for speed-to-power and reliability, which has "opened more doors for Solar outside of its traditional stronghold in the O&G market," according to Raymond James.
The Caterpillar Analyst: Analyst Tim Thein reiterated a Market Perform rating on the stock.
The Caterpillar Thesis: Some operators are using a larger number of smaller turbines rather than a smaller number of larger turbines due to the advantages of shorter lead times and risk diversification, Thein said in the note.
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"This trend plays to Solar's advantage as its Titan lines extend only to ~40mw, just reaching the edges of the utility market," he wrote.
Caterpillar's diesel and gas engine product lines as well as its Solar turbines strengthen the company's position among global engine OEMs to capture the power generation upside, the analyst stated.
"Less clear to us is how to triangulate this behind-the meter recip opportunity into a revenue / profit estimate for E&T, though we expect this to be a primary focus of Caterpillar's upcoming investor day," he further said.
CAT Price Action: Caterpillar shares were down 0.36% at $525.16 at the time of publication on Tuesday. The stock is approaching its 52-week high of $544.98, according to Benzinga Pro data.
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