The bulls are out for Caterpillar, at least at Goldman Sachs.
Analysts at the firm upgraded the stock to "buy" on Thursday, citing an "attractive" risk-reward profile for shares of the industrial equipment giant and calling for as much as 20% upside with their $168 price target over the next 12 months. Caterpillar shares closed up less than one-tenth of 1% at $139.72 on Thursday.
Not everyone is as eager to buy into the bull thesis for this China-tied name, however.
"Caterpillar has just been an unloved stepchild of this stock market," Gina Sanchez, founder and CEO of Chantico Global, said Thursday on CNBC's "Trading Nation."
"Every time you got any bad trade news, any bad oil news, any bad anything, they got beat up. And I think Goldman was basically saying, 'Hey, now they're really, really, really, really cheap,'" Sanchez said. "So, you're really buying this as a value story. But going forward, they still have challenges."
The strategist pointed to two areas of the market that have been seeing outsized moves to the downside of late: oil and mining.
"It's been really hard to be energy and materials stocks right now. And if you look at the places Caterpillar is particularly exposed to, it's oil and mining," she said.
With the International Energy Agency expecting global oil demand to slow for the first time in a decade in the first quarter, and mining companies putting their equipment orders on hold because of an uncertain outlook, that doesn't exactly bode well for Caterpillar, Sanchez said.
Add in the questions still surrounding the U.S.-China trade negotiations, and potential tariffs could make things especially difficult, she warned.
"If you were to ... buy into this Goldman call, you have to believe that something else is going to catalyze this stock," she said. "We're not seeing that in the mining sector, we're not seeing that in the underlying commodities prices, and we're certainly not seeing it in energy or oil demand."
"So, I'm not sure that it's going to be a fun hold, but I think, in the long term, it's very cheap," Sanchez said.
Todd Gordon, managing director at Ascent Wealth Partners, said in the same "Trading Nation" interview that the caution was "absolutely warranted."
"We've fallen into a big period of consolidation," he said of Caterpillar and the exchange-traded fund tracking China's largest companies, the iShares China Large-Cap ETF (FXI). "There's no real progress here on that chart."
To make matters worse, Caterpillar has also been underperforming its own sector, Gordon said, with the stock's relative ratio to the Industrial Select Sector SPDR Fund (XLI) also on the decline.
"For now, this is dead money," Gordon said. "I appreciate Goldman's call. But from an opportunity cost, there's other places to put your money right now [where] you're seeing much better performance. So, until these ranges break, OK, then we'll talk. But, otherwise, stay away."
Caterpillar is down about 5% year to date.
