RBC Capital increased its 12-month price target for Caterpillar (NYSE:CAT) to $658.00 from $587.00 on Friday, while leaving the stock's rating at Sector Perform. The firm said the decision followed Caterpillar's fourth-quarter results, which topped consensus estimates on every major metric.
In announcing the target adjustment, RBC analyst Sabahat Khan pointed to the company's 2026 guidance as being broadly consistent with Street expectations entering the quarter. Khan added that the guidance "may prove to be conservative," a characterization that leaves open the possibility of stronger-than-anticipated execution, according to the analyst's note.
Power generation emerged as the most notable growth area for Caterpillar, registering 44% year-over-year expansion. RBC attributed that surge largely to demand tied to data center projects. Beyond power generation, the company saw widespread demand across its divisions, with volumes rising across all major segments.
Supporting RBC's upward revision was a record backlog of $51 billion, which the firm highlighted as a material positive. That backlog figure represents a 28% increase versus the prior quarter and a 71% gain compared with the year-ago period.
Despite the stronger results and a higher price target, RBC kept its Sector Perform rating, signaling a neutral stance on Caterpillar shares relative to industry peers.
Separately, Caterpillar reported record fourth-quarter 2025 results, delivering earnings per share of $5.16 versus a consensus forecast of $4.70. Revenue for the quarter came in at $19.1 billion, ahead of the expected $17.85 billion. The company said performance was strong across its three principal business segments.
In response to the beat, Oppenheimer raised its price target on Caterpillar to $729.00 from $700.00 and kept an Outperform rating on the stock.
The combination of better-than-expected quarterly results, robust revenue and EPS figures, meaningful backlog growth and targeted analyst commentary underpinned the revised valuations by RBC and Oppenheimer. However, RBC's decision to maintain a Sector Perform rating indicates the firm retains a neutral comparative view on the shares despite the operational positives.