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Caterpillar now on Goldman Sachs “conviction sell” list

One of the reasons Caterpillar’s getting pounded this morning is Goldman Sachs adding it to a “conviction sell” list. What they mean:

“We see an absence of catalysts near term, with Caterpillar earnings per share likely to bottom later (2010) than most industrials (2009) given high exposure to commodity producer capex,” Goldman analysts wrote in a note.

The analysts also said the company’s 2009 earnings outlook of $2.50 a share was “risky.” Goldman expects $2 a share. However, CAT Financial’s outlook of a 50 percent drop in earnings is reasonable, Goldman said, and added that the downturn may encourage the financial unit to de-lever.

Have to say I’m a bit dubious about the $2.50 EPS number myself; it felt rather arbitrary.

(Homework assignment: Find out how much leverage Cat Financial is carrying.)

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Tom Mangan posted at 8:01 am January 30th, 2009 |

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