TLDR
- Oppenheimer raised its price target on CAT to $1,105 from $980, keeping an Outperform rating
- CAT’s backlog hit $62.7 billion exiting Q1 2026, with sequential growth of $11.5 billion
- Full-year sales guidance raised to low double-digit percentage growth, up from a 5–7% CAGR range
- Project Kilby with Chevron and Microsoft will use Solar Turbines infrastructure in West Texas
- 5 analysts have revised earnings estimates upward ahead of the Q2 report
Oppenheimer lifted its price target on Caterpillar (CAT) to $1,105 from $980 on Monday, maintaining its Outperform rating ahead of the company’s Q2 earnings report. CAT currently trades at $942.91, up 137% over the past year.
The firm expects another strong quarter against already elevated expectations, with backlog momentum continuing into Q2.
Backlog and Order Strength
Caterpillar exited Q1 2026 with a backlog of $62.7 billion. That figure was boosted by a sequential increase of $11.5 billion, driven by project announcements from Altus and Chevron, strong rental demand, and healthy order intake in Mining.
Order rates have been strong across all product categories. Service revenue is also expected to grow through fiscal year 2026.
On its Q1 earnings call, Caterpillar raised full-year sales guidance to low double-digit percentage growth. That’s a step up from the previous target of the top end of a 5–7% compound annual growth rate range.
Management cited strength across all end-markets as the driver. Margin expectations were also lifted to the bottom half of its investor day range.
The company said Q2 2026 sales should see a sequential increase versus Q1, in line with typical seasonality. Construction Industries growth year-over-year may be more muted, due to lower dealer build compared to last year.
Operating margins are guided higher year-over-year in Q1, excluding tariff impacts. That’s on positive volume and price, partially offset by higher manufacturing costs, SG&A, and R&D expenses.
Caterpillar also said it is tracking ahead of its large engine capacity expansion plans for 2026. That’s worth watching as energy and data center demand continues to grow.
Project Kilby and Recent Moves
One of the more interesting recent developments is Project Kilby — a joint venture with Chevron and Microsoft to build a power facility in West Texas. The project will supply electricity to a Microsoft data center using turbines and electrical infrastructure from CAT’s subsidiary, Solar Turbines.
Caterpillar also acquired Skycatch, a spatial data capture and analytics company focused on mining. That follows its earlier purchase of RPMGlobal, deepening its data-driven mining tech portfolio.
The Board approved an 8% dividend increase, raising the quarterly payout to $1.63 per share.
On the other side of the trade, investor Michael Burry has disclosed a short position against CAT, citing valuation concerns tied to AI infrastructure spending.
Five analysts have revised their earnings estimates upward for the upcoming period, according to InvestingPro data. That adds to the bullish setup heading into the Q2 report.
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