Dow Jones stock Caterpillar rallied Wednesday after analysts raised their price targets on the maker of heavy equipment.
Truist raised its price target to 582 from 507 on Wednesday and kept a buy rating as the firm previewed third-quarter results in the sector.
Analysts cautioned about risks to the industry in the second half the year as tariffs become fully reflected in margins, TheFly.com reported. While tariff pressures are contained to this year, they could be offset in 2026.
On Aug. 28, Caterpillar said in an SEC filing that its costs from tariffs imposed in 2025 will range from $500 million to $600 million in Q3. That's $100 million more than it expected just weeks earlier. For the full year, the company sees a hit of $1.5 billion to $1.8 billion.
Meanwhile, Jefferies raised its price target on Caterpillar to 570 from 500 and kept a buy recommendation Wednesday, according to FactSet. On Tuesday, Citigroup raised its price target to 570 from 540 and maintained a buy rating.
Half of the 26 analysts who cover Caterpillar have buy or overweight ratings on Caterpillar, with 12 others making hold recommendations and one with a sell rating. The average price target is 506.70. Shares traded near that target Wednesday afternoon.
The company should see earnings growth thanks to a rush of incoming orders, especially from the energy industry, an analyst said last month. Caterpillar is also a fringe AI play because its generators provide backup power for AI data centers. Plus, some analysts say the company benefits from the data center construction boom.
Caterpillar Stock Analysis
Caterpillar stock rose more than 4% Wednesday afternoon. The stock is up 40% year to date, and up 15% from its most recent entry at 441.15: the buy point from a flat base. Combined with an earlier cup base, the stock formed a base-on-base formation.
The relative strength line is also at new highs, reflecting the Dow Jones stock's market-leading strength. Caterpillar was one of the best-performing stocks in the Dow Jones Industrial Average last month.
The stock has a 92 Composite Rating and a 21-day average true range (ATR) of 2.33%. The average true range, available on IBD MarketSurge, gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should not be too concentrated in such stocks.
