Baird analyst downgrades Caterpillar

Baird analyst downgrades Caterpillar citing subdued growth next year

Associated Press

NEW YORK (AP) -- A Baird Equity Research analyst said that Caterpillar Inc.'s growth is likely to remain subdued in 2014 due to weakness in the mining and construction sectors.

THE OPINION: Analyst Mircea Dobre lowered Caterpillar's share rating to "Neutral" from "Outperform."

Caterpillar, which makes construction and mining equipment, could be hurt as more Americans opt to not to buy homes. "Relatively lower credit availability for lower income and younger households likely means that the shift towards rental is here to stay," said Dobre in a note to clients. He also said that more Americans are opting for multifamily homes than single family homes.

That hurts Caterpillar, Dobre said, because single family housing is an important driver of heavy equipment use, particularly in clearing new lots and developing the infrastructure of new subdivisions.

Mining companies have said they are uncertain about future growth, Dobre said, which could also hurt Caterpillar.

A Caterpillar spokesman declined to comment.

THE STOCK: Despite the downgrade, Caterpillar shares rose 90 cents to $87.97 in afternoon trading Wednesday. Shares of the company have traded between $79.49 and $99.70 in the past 52-weeks. They are down about 2 percent since the beginning of the year.

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