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<Research> HSBC Research Raises Caterpillar, Inc. (CAT.US) TP to USD1100, Says Current Valuation Yet to Reflect Potential
HSBC Research said in a report that Caterpillar, Inc. (CAT.US) has surged 54% YTD, outperforming the S&P 500's 5% gain. Although the market already views the company as a key benef...
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<Research> HSBC Research Raises Caterpillar, Inc. (CAT.US) TP to USD1100, Says Current Valuation Yet to Reflect Potential
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HSBC Research said in a report that Caterpillar, Inc. (CAT.US)      has surged 54% YTD, outperforming the S&P 500's 5% gain. Although the market already views the company as a key beneficiary of artificial intelligence data center (AIDC) construction, the broker believes that increasing exposure to the prime power segment could drive a valuation re-rating.

The broker noted that the company's backlog hit another record high in 1Q26 and that it has decided to raise large engine production capacity to three times the 2024 baseline level. By 2030, total capacity for large engines and gas turbines is expected to reach about 65 gigawatts. The broker forecast that sales from the Power & Energy segment will grow 16% and 15% in 2026 and 2027, respectively, with data center-related sales expanding by 26% to 34%, lifting their contribution to total sales to 13% to 14%.

Related NewsInitial Jobless Claims for May/16 in the United States is 209K, lower than the previous value of 212K. The forecast was 210K.
Despite capacity expansion, the broker expects no significant margin pressure in the near term. The company has also lowered its tariff impact guidance for this year to USD2.2 billion to USD2.4 billion from the previous USD2.6 billion. The broker projects adjusted operating profit margin (OPM) to improve from 17.2% in 2025 to 18% and 19% in 2026 and 2027, respectively.

Given the strong outlook for AIDC, HSBC Research raised its TP on Caterpillar, Inc. to USD1100 from USD850 and maintained a Buy rating. (ss/j)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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