Bank of America (BofA) has revised its price target for Caterpillar Inc. (CAT) upwards from $735 to $825, affirming its “Buy” recommendation after the company reported strong financial results for the year 2025.
Caterpillar”s annual revenue reached $67.6 billion, marking a 4% increase year-over-year. Notably, the Power & Energy division was a standout performer, achieving a remarkable 23% growth with sales totaling $9.4 billion.
In the fourth quarter, Caterpillar outperformed expectations with earnings per share of $5.16, surpassing the consensus estimate of $4.67. Revenue for the quarter was reported at $19.13 billion, significantly exceeding projections of $17.81 billion, representing a 17.9% increase from the same period the previous year.
CNBC commentator Jim Cramer expressed his support for Caterpillar”s turbine business, highlighting its demand across various sectors beyond just data centers. However, he advised caution, suggesting that he finds Cummins (CMI) to be a more appealing investment at current market valuations.
Despite the bullish outlook from BofA, there are signs of caution in the market. In February, short positions in CAT rose approximately 61%, indicating a potential bearish sentiment among certain investors. Additionally, company insiders sold over $98 million worth of shares in the last quarter, raising questions about confidence levels within the company.
Currently, CAT”s shares have surged 124% over the past year, with a 28% increase since the start of 2025, trading at approximately $752.81. The stock”s price-to-earnings ratio stands at around 40, reflecting a robust market capitalization of $350.27 billion.
Analyst ratings for Caterpillar show a split opinion, with sixteen “Buy” ratings, seven “Hold” ratings, and one “Sell” rating. The average price target from analysts is currently $712.52, which is below the stock”s current trading level. Wells Fargo has set a target of $870, while other firms have varying targets ranging from $425 to $790.
Caterpillar”s stock continues to be a focal point for investors, particularly in light of the upcoming quarterly dividend of $1.51 per share, yielding an annualized distribution of $6.04 at a yield of 0.8%.
