By Steve Gelsi
Construction equipment maker lifts tariff impact estimate
Mining and construction equipment maker Caterpillar continues to face unfavorable manufacturing costs resulting from higher tariffs.
Caterpillar Inc.’s higher estimate for tariff costs is likely the first of many such warnings from companies in the manufacturing sector as increased prices of steel and aluminum impact the bottom line.
So says Raymond James analyst Tim Thein, who cut his earnings targets for Caterpillar after the bulldozer maker bumped up its cost estimates for tariffs.
“These tariffs, which apply to a number of finished goods categories with steel/aluminum content, will likely be broadly felt across the space,” said Thein, who reiterated a market-perform rating on Caterpillar. “We expect these tariffs (if sustained) to put eventual downward pressure on estimates across much of our coverage.”
Caterpillar’s stock (CAT) fell 4.2% on Friday. The stock is one of 30 in the Dow Jones Industrial Average DJIA, which moved lower by 0.26%.
Looking ahead, Thein said he’s expecting higher prices to be on the table in 2026 across the industry, but these costs will also be shaped by the pace of construction activity and dealer inventories.
Meanwhile, Oppenheimer analyst Kristen Owen reiterated an outperform rating on Caterpillar’s stock, and cut its price target to $480 a share from $493 a share.
The company upped its previous tariff cost outlook it issued on Aug. 5 due to changes in steel and aluminum tariffs, as well as reciprocal rates with India, Owen said.
Caterpillar’s strategy to ease the impact of tariffs remains unclear but all options are on the table, the analyst said.
All told, Caterpillar increased its third-quarter tariff cost estimate by $100 million to a range of $500 million to $600 million. Its full-year tariff cost estimate was also hiked to a range of $1.5 billion to $1.8 billion, up from an Aug. 5 projection of $1.3 billion to $1.5 billion.
As of Thursday’s close, Caterpillar’s stock has risen 19.9% in 2025, while the S&P 500 has risen 10.6% and the Dow Jones Industrial Average was up 7.3%.
Also read: Caterpillar expects up to $1.5 billion in tariff costs this year, and the stock is rising
-Steve Gelsi
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08-29-25 1502ET
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