Blue-chip stock Caterpillar Inc (NYSE:CAT) is up 1.6% to trade at $419.04 this morning, after the machinery name landed an upgrade to "outperform" from "in-line" at Evercore ISI. The firm noted "recent resilience in construction equipment margins," and set its price target of $476 -- a 15.3% premium to yesterday's close.
CAT is enjoying today's pop, as it attempts to pivot off a pullback that followed its July 31 record high of $441.15. CAT has added 21% in the last 12 months, with recent support emerging at the 40-day moving average.
Heading into today, 50% of the 22 brokerages in coverage called CAT a "hold" or worse recommendation. Should this pessimism begin to unwind, the stock could surge higher still.
Over the past 10 weeks, call traders have been moving in. This is per CAT's 50-day call/put volume ratio of 1.64 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 88th percentile of readings from the past 12 months.
Options traders are pricing in relatively low volatility expectations, per CAT's Schaefer's Volatility Index (SVI) of 23% that sits in the 6th percentile of readings from the past 12 months.
It's also worth noting that the stock has tended to outperform these volatility expectations, per its Schaeffer's Volatility Scorecard (SVS) of 88 out of 100.
