Why This Analyst Expects Caterpillar To Post 3 Years Of Revenue Growth

Caterpillar Inc. (NYSE: CAT) is heading for the first megacycle of its financial performance in 14 years and the second in modern history, according to Cowen & Co.

The Caterpillar Analyst: Matt Elkott initiated coverage of Caterpillar with an Outperform rating and $241 price target.

The Caterpillar Thesis: At least 75% of the company’s markets are likely to work to reduce emissions and seek improved or new power technologies, Elkott said in the initiation note.

“We see potential for incremental revenue opportunities of $35Bn for CAT from autonomous solutions in the next 10 years. We expect strong growth in services, organically and via acquisitions,” the analyst said.

“We estimate that 33% of total CAT revenues can benefit directly or indirectly from the US infrastructure bill. We are modeling for 30%, 15%, and 4% increases in total company CI revenue in 2021, 2022, and 2023, respectively,” he said. 

“We are modeling for revenue growth, gross and operating margin expansion, and EPS increases for three consecutive years,” he added.

CAT Price Action: Shares of Caterpillar had risen by 2.81% to $194.20 at the time of publication Thursday.