Caterpillar (NYSE: CAT) shares fell 4% on Monday.
Erste Group downgraded the stock to Hold from a previous Buy rating. Analyst Hans Engel cited valuation concerns following a significant price run-up over the past year. Engel stated that potential for further share price gains is now severely limited.
The company maintains strong operating margins and a high return on equity. However, gross and operating margins declined year-over-year during the last quarter. The stock currently trades at a significant premium compared to its sector peers.