Shares of Caterpillar rose Monday after J.P. Morgan upgraded the stock, citing expectations for another strong year ahead in light of the Republican tax reform.
"Although we missed out on Caterpillar's outperformance in 2017, we believe that there is still significant upside to the stock," analyst Ann Duignan wrote in a note to clients. "The Tax Cuts and Jobs Act supports replacement of equipment at an accelerated pace through 2022 as both new and used equipment are now eligible for expensing, a positive for Caterpillar's North American end markets."
Shares of Caterpillar, which have climbed 74 percent climb over the past 12 months, rose 2.1 percent following Duignan's bullish call.
As a component of the Dow Jones industrial average, Caterpillar has helped lead the index to record highs during the past several months, joining other industrial giants like Boeing and 3M in a charge to all-time highs. Caterpillar closed at a record $161.96 on Friday.
The analyst raised her price target on the company to $200 from $144, representing 23 percent upside over the next year.