Big Machinery Firm Faces 'Muted Recovery': Analyst

Thursday, 3 Sep 2009 | 12:02 PM ET

There’s been too much hype around Caterpillar versus the expected reality of a muted recovery in construction activity, said Eli Lustgarten, analyst at Longbow Research.

Spotlight on Caterpillar
Caterpillar, a global leader in farm and construction machinery, is one of the most actively viewed stocks on CNBC.com. Eli Lustgarten, of Longbow Research, tells CNBC whether this popular stock still has room to run.

“The U.S. is the biggest near-term upturn because it’s been down for 3 years in a row and all 50 percent this year,” said Lustgarten. “But housing recovery will be slow, non-residential construction is just starting to go down into 2011 and the highway bill has been postponed until March of 2011. So you’ll get a recovery, but it will be muted.”

Lustgarten said he has a neutral rating on the stock .

“China’s market is a very big market but Caterpillar’s a latecomer to it,” he said. “Translation: they’re not going to make much money over the next couple of years.”

Lustgarten said although Caterpillar stocks look good in 2012 to 2015, for the next 3 to 4 years, they are going to have a far more muted recovery than the optimism that the company recently articulated.



Lustgarten does not own any shares of Caterpillar or Deere.

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