Citi Lifts Caterpillar (CAT) Target as Construction and Mining Outlook Improves

Core Viewpoint - Caterpillar Inc. (NYSE:CAT) is experiencing positive momentum in its construction and mining sectors, leading to an improved outlook and increased price target from Citi [2]. Financial Performance - In Q3 2025, Caterpillar's sales increased by 10% to $17.6 billion, with power-generation revenue rising by 33% due to strong demand for engines in AI data centers [3]. - Adjusted operating margin decreased to 17.5% from 20% year-over-year, and adjusted EPS fell to $4.95 from $5.17, although it surpassed Wall Street's estimate of $4.52 [3]. Cash Generation and Shareholder Returns - The company generated free cash flow of $3.2 billion in Q3, allowing for $700 million in dividends and $400 million in stock buybacks [4]. - Caterpillar's backlog reached a record $39.8 billion, growing by $2.4 billion from Q2 and $11.2 billion from Q3 of the previous year [4]. - A quarterly dividend of $1.51 was declared on December 10 [4]. Market Outlook - Citi raised its price target for Caterpillar to $690 from $670, maintaining a Buy rating, with a focus on opportunities in construction and mining for the upcoming year [2].