Truist Securities raised its price objective for Caterpillar (NYSE:CAT) to $786.00 from $729.00 and retained a Buy rating after the heavy equipment maker delivered a stronger-than-expected fourth-quarter performance.
The company reported fourth-quarter adjusted earnings per share of $5.16, a result that topped analyst expectations by 9% and was supported by sales and margin outcomes that exceeded forecasts. Management disclosed a total backlog of $51.2 billion, up 71% year-over-year - a $21.2 billion increase from the prior year - and up $11.3 billion sequentially to a record level.
Backlog and segment detail
Caterpillars Power and Energy segment was the primary driver of backlog expansion, with particularly strong orders in Power Generation and Oil & Gas. Construction Industries recorded its strongest ordering quarter in four years, while Resource Industries posted its strongest quarterly order rate since 2021.
Retail sales across businesses showed mixed but predominantly positive trends. Combined Machine, Power and Energy retail sales rose 15%, with Power and Energy up 37% overall. Within that segment, Power Generation increased 44% and Oil and Gas rose 38%. Construction retail sales climbed 11%, paced by an 18% increase in North America. Resource retail sales declined 7%, which management had anticipated.
Outlook and Truists framing
Truist highlighted that only 62% of the current backlog is expected to be realized in 2026, a lower percentage than typical for the company. The firm interpreted that lower conversion rate as conferring "above average earnings visibility" for Caterpillar. Truist also noted that Caterpillars 2026 revenue guidance, which targets 5-7% growth, could be conservative in light of the record backlog and encouraging retail sales trends.
Brokerage reactions
Following the quarter, several other brokerages adjusted their price targets upward. Bernstein SocGen Group raised its target to $678, citing strong demand that allowed Caterpillar to top top-line expectations despite pressures on margins. RBC Capital increased its target to $658, noting that results beat consensus and that the company introduced 2026 guidance aligned with market expectations. BofA Securities moved its target to $735, pointing to a robust backlog while also flagging investor concerns about tariff-related headwinds to margin expansion. Oppenheimer lifted its target to $729 and kept an Outperform rating based on strong performance across Caterpillars main segments. DA Davidson set a $650 target and cited anticipated 2026 top-line growth tied to the companys datacenter business.
Interpretation
The accumulation of price-target increases reflects a consensus among several analysts that Caterpillars most recent quarterly results and the level of backlog justify higher valuations. The companys segment-level order strength, particularly in Power and Energy and in Construction, was central to those reassessments. While some firms flagged margin pressures and tariff concerns, the aggregate response from brokers was to raise expectations.