BofA Securities raised its price objective on Caterpillar (NYSE:CAT) to $735.00 from $708.00 and kept a Buy rating on the heavy equipment manufacturer. The new target implies upside from Caterpillar's recent share price of $665.24, which sits roughly 1% below the 52-week high of $679.99.
The broker's revision came as Caterpillar shares rose 3% on the day, outpacing a flat S&P 500, even as some investors questioned whether the company's 2026 guidance simply matched consensus because tariff pressures could limit margin expansion.
BofA described Caterpillar's top-line outlook - growth of +7% - as conservative. The firm highlighted that inventories are currently low while retail sales are rising, a setup that could point to upside versus the company's guidance. Caterpillar reported $67.59 billion in revenue over the last twelve months, representing a 4.29% growth rate.
Central to BofA's case is Caterpillar's record backlog of $51 billion. The backlog is expected to grow further after the company booked a 2GW power order this week alone. BofA also sees additional upside potential in copper and pipeline segments, noting that several lead indicators remain at trough levels.
On pricing, BofA said the bearish narrative around Caterpillar's pricing power is ebbing. The firm projects that pricing in 2026 will rise by roughly 2%. While Caterpillar's trailing price-to-earnings ratio stands at 34.2, the company has a long record of returning capital to shareholders - paying dividends for 56 consecutive years and increasing the payout for 12 straight years.
Market metrics noted in coverage show Caterpillar as a major Machinery industry company with a market capitalization of $311.32 billion and solid financial health according to InvestingPro metrics.
Other analyst moves followed Caterpillar's strong quarterly results. The company posted record fourth-quarter 2025 earnings, delivering an EPS of $5.16 versus a $4.70 consensus forecast, and reported revenue of $19.1 billion versus an expected $17.85 billion. In the wake of that report, RBC Capital raised its price target to $658 while keeping a Sector Perform rating, commenting that the 2026 guidance was broadly in line with Street estimates but may be conservative.
Oppenheimer also lifted its price target to $729 and maintained an Outperform rating, pointing to robust backlog growth and healthy performance across Caterpillar's three main business segments.
The cluster of analyst upgrades and the company's quarterly beat underpin a generally favorable view among the firms covering Caterpillar, with BofA explicitly calling out low inventories and a sizable, growing backlog as reasons the firm expects upside to current forecasts.