Caterpillar shares were downgraded Friday by an analyst at Morgan Stanley amid concerns around two of the industrial's key business segments. Analyst Courtney Yakavonis lowered her rating on the industrial giant to equal weight from overweight. She also trimmed her price target on the stock to $145 per share from $150. The new price target still implies 11% upside from Thursday's close of $131.04. Caterpillar shares slid 0.6% in the premarket to $130.30. "We see increasing downside risks to CAT's Construction and Energy & Transportation segments," Yakavonis said in a note titled "Out of Steam." Yakavonis noted the construction-equipment cycle will turn into a headwind for Caterpillar in 2020 while higher inventories could also weigh on the business. "We are also concerned about pricing heading into 2020, and think that margins could still be under pressure next year even if input costs fall." "With respect to E & T, recent negative revisions to Oil & Gas capex forecasts suggest that CAT's E & T revenues could post further declines in 2020," the analyst said. Caterpillar shares are up just 3.1% in 2019, lagging the broader market. The S & P 500 has rallied nearly 20% this year and is within striking distance of its all-time high. Investors and analysts will get more guidance regarding Caterpillar on Wednesday, when the company is scheduled to report its third-quarter results. Subscribe to CNBC on YouTube.
An employee assembles an excavator at the Caterpillar Inc. manufacturing facility in Victoria, Texas.