Bernstein SocGen Group has raised its 12-month price target for Caterpillar to $678.00 from $630.00 and left its rating at Market Perform. The brokerage cited signs of broadening demand and improving price trends as the rationale for the higher target, while continuing to single out valuation as a constraint on the stock's upside.
The shares were trading at $665.24 at the time of the report, roughly 2.2% below a 52-week high of $679.99. The stock gained about 3% in the sessions following Caterpillar's fourth-quarter results. For the trailing twelve months, the company reported annual revenue of $67.59 billion and a gross profit margin of 28.79%.
Bernstein's upgrade to the target reflects several demand-related signals cited by the firm: a strengthening and broadening of end-market demand, a positive inflection in pricing, and a reduction in year-over-year tariff headwinds. Those developments follow Caterpillar's strong quarterly performance, which included record fourth-quarter earnings and revenue that surpassed consensus expectations.
In the fourth quarter of 2025, Caterpillar reported earnings per share of $5.16 compared with an expected $4.70, and revenue of $19.1 billion versus an anticipated $17.85 billion. That outsized beat underpins the upbeat demand commentary that several analyst teams have highlighted.
Despite those operational positives, Bernstein emphasized margin pressures that persisted through the quarter. The firm pointed to negative pricing outside of the Power and Energy segment, and to elevated tariff costs that have weighed on profitability. These cost and pricing dynamics are central to Bernstein's cautious stance despite the raised target.
Valuation remains a key reservation for the firm. Bernstein noted the stock is trading at about 30 times 2026 earnings estimates, a level the firm described as well above typical peak valuations. A more current price-to-earnings ratio of 34.2 further underscores the premium at which the shares are valued relative to the firm's fair value assessment.
Other broker updates have moved in a similar direction on price targets while reflecting varying stances on rating. BofA Securities raised its target to $735 and kept a Buy rating, citing a strong backlog. RBC Capital lifted its target to $658 from $587 while keeping a Sector Perform rating, noting that Caterpillar's 2026 guidance was largely in line with estimates and perhaps conservative. Oppenheimer also raised its target to $729 and maintained an Outperform rating, pointing to robust backlog growth.
Taken together, these analyst adjustments highlight a split between operational momentum and the premium valuation investors are being asked to pay. The company posted solid top-line growth and margin metrics for the trailing year, yet tariff-related costs and pockets of negative pricing outside Power and Energy remain headwinds.
For investors, the near-term case appears to rest on continued execution against pricing and cost pressures, and on whether easing tariff dynamics and broadening demand translate into sustainable margin recovery. Meanwhile, the stretched valuation metrics mean that much of the positive outlook is already reflected in the share price, according to Bernstein.
Summary
Caterpillar's price target was raised to $678 by Bernstein, which maintained a Market Perform rating. The update followed strong fourth-quarter results and signs of improving demand, offset by continued margin pressure from negative pricing outside Power and Energy and higher tariff costs. Analysts across the street also raised targets, but valuation concerns persist with the stock trading at a high multiple of forward earnings.
- Key points
- Bernstein raised its price target to $678 from $630 while keeping Market Perform.
- Caterpillar reported record Q4 EPS of $5.16 and revenue of $19.1 billion, beating estimates.
- Valuation is elevated - roughly 30 times 2026 earnings and a P/E near 34.2 - which weighs on upside.
- Sectors impacted
- Heavy equipment and industrial capital goods
- Power and Energy segment
- Construction and mining end markets
- Risks and uncertainties
- Tariff costs remain elevated and have pressured margins - risk to industrial profit pools.
- Negative pricing trends outside of Power and Energy have eaten into margins - risk to margin recovery.
- High valuation multiples mean limited room for error; near-term execution shortfalls could lead to downside.