NEW YORK (AP) -- J.P. Morgan cut its rating and price target for Caterpillar on Monday as mining companies try to put a cap on capital expenditures.
The energy sector may also face regulatory hurdles after the re-election of President Barack Obama, J.P. Morgan said.
"These catalysts point to an extended downcycle of investment beyond 2013, and recovery in spending into 2014 is unlikely, raising the risk of negative earnings revisions into 2014," wrote analyst Ann Duignan.
Duignan cut Caterpillar to "Neutral" from "Overweight" and reduced her price target to $90 from $109.
Other avenues to support stock prices, namely share buybacks, are unlikely because Caterpillar doesn't have the balance sheet to support those actions, Duignan said.
Net debt to total capital is 30 percent, Duignan said, and debt reduction and the dividend remain the highest capital allocation priorities.
Shares of Caterpillar Inc. rose 35 cents to $85.30 in afternoon trading, but have been trending downward since mid-September, when shares were around $94 each. In the past 52 weeks, shares have been as high as $116.95.
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