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Caterpillar Inc. (NYSE: CAT) is set to report its most recent quarterly results before the markets open on Wednesday. Analysts are calling for $2.88 in earnings per share (EPS) and $13.49 billion in revenue. In the same period of last year, it posted $2.86 in EPS and $13.51 billion in revenue.

Caterpillar lost one of its long-time bullish supporters in August. Goldman Sachs downgraded the heavy equipment giant to Neutral from Buy, and the firm lowered its target price by almost 20% to $130 from $156.

Goldman Sachs analyst Jerry Revich had maintained a Buy rating since late in 2016. What is interesting about this call is that some contrarian investors with longer-term views might wonder if this might signal the start of making a bottom in Caterpillar shares, as it is losing one of its biggest bulls.

Calling out an analyst downgrade as marking the bottom probably sounds overly cynical. That said, for decades investors have seen even the most well-known analysts upgrade and raise target prices on stocks close to the top and downgrade the stocks and cut target prices close to the bottom.

While the issues about China and slower global growth are well known, the Goldman Sachs downgrade cited concerns over lower resources demand and also that the construction business is in oversupply.

The report also noted that Caterpillar’s resource order recovery has slowed significantly, with the recovery petering out earlier compared with prior recovery cycles. To show the point further, Revich noted that segment revenue and orders are stabilizing at about an $11 billion run rate for 2019. While that is still a large number, the prior peak run rate was about $21 billion.

After it reduced dealer inventories at the trough, Revich was surprised that Caterpillar built up its construction industries dealer inventories in North America at the beginning of the North America construction season.

Overall, Caterpillar has underperformed the broad markets, with its stock up only 4% year to date. In the past 52 weeks, the stock is actually down over 2%.

A few other analysts weighed in on Caterpillar ahead of the report:

• Morgan Stanley rates it as Equal Weight with a $145 price target.
• Credit Suisse has an Outperform rating and a $149 price target.
• UBS Group has a Sell rating with a $117 price target.
• Cleveland Research has a Hold rating.
• Citigroup’s Buy rating comes with a $145 price target.
• Wells Fargo has a Market Perform rating and a $143 target.

Shares of Caterpillar traded at $132.09 on Tuesday, in a 52-week range of $111.75 to $144.77. The consensus price target is $139.35.

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