Caterpillar Inc (NYSE:CAT) is leading the Dow Jones higher Tuesday after Jefferies analyst Stephen Volkmann upgraded the stock from a Hold rating to a Buy rating and raised the price target from $215 to $260.
The Jefferies analyst was previously concerned that constrained CAPEX and ESG themes in mining and oil and gas markets would lead to more modest cyclical growth than in past cycles. However, following Russia's invasion of Ukraine, Volkmann now believes the ongoing geopolitical tensions have impacted global commodity markets in a way that will likely spur years of reinvesting in the name.
Capacity expansion and supply diversification will be necessary for the mining and oil and gas sectors going forward, which should drive structurally higher pricing, according to the Jefferies analyst.
Related Link: Jefferies Turns Bullish On Caterpillar, Raises Price Target By 21%
CAT 52-Week Range: $179.67 - $246.69
Caterpillar shares were up 8.24% at $212.92 at time of publication.
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