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Caterpillar (NYSE:CAT) is one of Jefferies’ top picks into the first quarter earnings season, analysts told investors Friday.
In a note covering the machinery sector, the analysts, who have a Buy rating on CAT, stated that they expect the company to have strong results but provided limited commentary regarding the second quarter and “nothing substantive beyond that.”
“Still, the tone should be upbeat, and less may be more with respect to guidance this quarter,” the analysts wrote.
Overall, Jefferies expects most machinery companies to beat first-quarter earnings estimates, but they note “investors are focused on the risks of a credit tightening cycle for which there is little evidence yet.”
“Strong earnings may be modestly rewarded, but a definitive view on business trends will probably have to wait until mid-year. Meanwhile, strong backlogs, improving margins, mega-trends, and valuation should limit additional downside,” they added.
