Ahead of the Bell: Caterpillar

HARTFORD, Conn. - Heavy equipment dealers believe the market will remain weak for the rest of the year with sales in western Europe down steeply, an analyst said Tuesday as he slashed his profit estimates for Caterpillar Inc.

Results of a survey of between 40 and 45 dealers of Caterpillar, Terex Corp. and other heavy equipment brands worldwide "reflect deteriorating conditions overseas and concerns that we could be at the bottom for some time in the U.S.," Credit Suisse analyst Jamie Cook wrote in a note to investors.

He said 75 percent of U.S. dealers "believe we have reached the bottom" and forecast year-over-year declines of between 15 percent and 20 percent this year.

Dealers are particularly sour about business in western Europe, which "remains depressed," he said.

Most dealers forecast the market to be off between 30 percent and 50 percent this year, worse than previous expectations of a decline of between 20 percent and 40 percent, he said.

Even demand for equipment in energy rich regions such as Canada and the Middle East is off by more than 50 percent, Cook said. However, China may be benefiting from stimulus spending, with increases seen in the low-to-double digits, he said.

Cook cut his 2009 earnings estimate on Caterpillar to 25 cents per share from $1.25 per share and reduced his 2010 estimate to $1 from $1.80 per share.

Cook maintained his "Neutral" rating.

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