Morgan Stanley is out uber negative on Catepillar (NYSE:CAT) this morning saying risk/reward has tilted more negative for CAT shares.
Recent comments by the CEO of competitor Hitachi Construction—who has “never before experienced seeing sudden, simultaneous drops in worldwide demand” and is seeing global demand down 25-30%—support their bearish view on the shares. MSCO's 2010 EPS estimate of $2.57 is 40% below consensus ex-MS. CAT has held that emerging markets revenues would grow in 2009; they’ve argued for a steep fall but allowed for the possibility of upside. Upside now seems very unlikely.
Differentiation from consensus:
First, they doubt stimulus will have much of an impact on equipment sales, especially in 2009.......Notablecalls: I think CAT stock will see selling pressure on this. Imagine being long the name and seeing this comment from Mother Morgan - would you sell? I think I would.
CAT's a short this morning.
The most interesting tid-bit from the call is that MSCO now thinks 2010 will be worse than 2009. That's certainly out of consensus....MORE
Wednesday, January 14, 2009
Caterpillar (NYSE:CAT): Risk/reward has tilted more negative - Morgan Stanley
From Notable Calls: