Caterpillar: Wall Street too bullish on company for 2017

Caterpillar warned Thursday that Wall Street's 2017 earnings targets for the industrial equipment company are too lofty despite some hopeful signs for its business, including higher commodity prices.

Analysts project the firm will earn $3.25 a share in 2017, but that estimate is "too optimistic considering expected headwinds," a Caterpillar executive said in a presentation conference in Palm Beach, Florida.

There are a number of encouraging signs, including higher commodity prices, an OPEC deal to cut oil production and boost prices, and expectations that US President-elect Donald Trump will enact a major public works initiative, Caterpillar Resources Industries President Denise Johnson said.

But she also pointed to economic vulnerabilities, including volatile oil prices, a weak North American construction market and an uncertain outlook in Europe after Britain voted to leave the European Union.

Shares in Caterpillar were up 0.4 percent at $95.98 near 1740 GMT, but below session highs. Shares have jumped more than 11 percent since Trump's election.

Customers in the mining industry have yet to open the spigots on capital spending following a two-year downturn that badly hit the company's results, Johnson told the conference.

We have seen "some increased optimism" from customers due to higher commodity prices, she said. "Yet this has not translated into any tangible machine sale gains for Caterpillar."

There have been some positive "green shoots" where seen in increased bidding inquiries among South American copper miners and Indian coal producers, but these have yet to result in orders.

"I don't see a significant increase in sales in 2017 ... unless something changes that we don't see today," she said.

Caterpillar has slashed jobs and industrial facilities in response to the downturn. In October, it reported a nearly 50 percent drop in third-quarter earnings to $283 million following a 16 percent drop in revenues to $9.2 billion.