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The Ratings Game: Caterpillar downgraded as analyst calls an earnings top

Caterpillar’s stock was downgraded by Deutsche Bank analyst Chad Dillard, who also slashed his price target below current levels, citing increasing concerns that earnings will peak this year.

Dillard said the biggest risk to the bullish case for Caterpillar is if backlog growth turns negative, as that has historically preceded a downward earnings revision cycle by three months. And it was becoming “increasingly clear” that Caterpillar’s order backlog will decline within the next quarter.

Caterpillar CAT, -0.78% reported in late January that the order backlog at the end of the fourth quarter was $16.5 billion, down 4.6% from the end of the sequential third quarter.

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