The analysts highlighted five key reasons for their bullish stance on the stock.
Low Risk of EPS Decline in Q4/Q1
The analysts noted that there is a low risk of a notable decline in EPS in Q4 and Q1 due to a tailwind from a price vs cost.
Improvement in Lead Indicators in 2H
The backlog may fall, but lead indicators are expected to improve in the second half of the year.
Higher Trough EPS in 2023 Recession Year
Despite 2023 being a recession year, Caterpillar's EPS is expected to be higher than expected.
Attractive EPS Power in 2024+
As investors look towards a "new economic cycle", Caterpillar's EPS power is expected to be attractive in the future.
Secular Pressure Abating in 2022
The analysts also believe that secular pressure on the company is abating in 2022. They also said that investors are likely to be surprised by CAT's 2023 EPS results despite it most likely being a recession year.
Multi-Year Growth Prospects Positive
As macro headwinds ease in the next 6-9 months and investors look towards a new cycle, Caterpillar's multi-year growth prospects are expected to be positive, according to analysts. They cited higher Capex in a world that is effectively "short" copper/oil/gas and a long tail of fiscal stimulus driving construction projects as reasons for their positive outlook.