Shares of Caterpillar (NYSE: CAT), a bellwether for the global economy, fell Wednesday after Deutsche Bank downgraded the maker of earth movers and other construction equipment.
Deutsche Bank downgraded Caterpillar to hold from buy and cut its 12-month price target to $128 from $152.
"Synchronized global growth has collapsed, the China Land Cycle is rolling over (and will continue to weaken despite the single positive data point this week), Europe is slowing more than expected and the U.S. is oversaturated with construction equipment," one Deutsche Bank analyst said in a note to clients late Tuesday.
"Each of these factors alone (is a) powerful driver(s) of CAT's earnings, but together this synchronized slowdown will not only usher in a negative earnings revision cycle, but also make 2019 the cyclical peak."
A better-than-expected manufacturing reading earlier in the week from China eased economic concerns a bit and boosted global stocks once again. This Deutsche Bank call flies in the face of those hopes for a comeback.
"Street numbers for 2019 and 2020 are 5% and 20% too high, but the current share price does not reflect this reality," the analyst said.
Tuesday brought word from the Peoria, Ill., company was laying off 118 employees performing janitorial services in three Central Illinois Caterpillar facilities next month.
GCA Services, Inc. lost its contract to perform janitorial services for Caterpillar, according to the Illinois Department of Employment Security.
CAT shares lost 79 cents to $139.48 soon after Wednesday’s opening bell.
