Bernstein cuts Caterpillar stock price target on bookings concerns

Bernstein lowered its price target on Caterpillar Inc. (NYSE:CAT) stock from $1,002 to $749, while keeping its rating at Market Perform. The machinery manufacturer's stock presently trades at $772.78, with a P/E ratio of 33.25. According to InvestingPro analysis, Caterpillar appears overvalued at its current price, ranking among companies on the Most Overvalued list.

The firm predicts a 20% earnings beat in the upcoming third quarter. Caterpillar boasts record revenue visibility, with a backlog covering 100% of the second-half 2026 revenues, a significant increase from the historical average of around 60%. This suggests nearly $6 billion in revenue potential for the third and fourth quarters.

Bernstein anticipates a slowdown in bookings momentum, which has not been accounted for in the current valuation. Behind-The-Meter power has extended the backlog beyond 12 months to nearly 40% of the total backlog, up from the historical 20%. However, the construction starts for data centers powered by Behind-The-Meter technology have remained flat at 15 gigawatts since May 2026.

Bernstein forecasts a 1.2x book-to-bill ratio for the third quarter, suggesting a backlog of $77 billion, up by 6% quarter-over-quarter, and orders of $27 billion, up by 40% year-over-year. The firm points out that Caterpillar's price-to-earnings ratio currently factors in a book-to-bill ratio of 1.5, and a reduction to 1.2 could lead to a roughly 20% de-rating to 20 times earnings.

Subscribers to InvestingPro can access 16 additional exclusive tips for CAT, featuring detailed valuation analysis and one of over 1,400 comprehensive Pro Research Reports that turn complex data into actionable intelligence.