Caterpillar shares have fallen as it joins a number of companies suffering from a contracting oil price.
The manufacturer’s price dropped almost six per cent after J.P Moran downgraded its rating over its exposure to the oil and gas market, as well as its continued exposure to a difficult mining sector, according to MarketWatch.
Its fall was also in line with a slump in the Down Jones and the S&P 500.
It is believed that company’s interest in the oil and gas sector attributes as much as 15 per cent of its revenues, as Cat provides turbines, transmission, and engines for drilling and offshore rigs as well as aftermarket services.
“Our analysis suggests that since 2010 U.S. construction equipment demand has been strongly correlated with the expansion of fracking and, as a result, we would expect to see a slowdown in equipment demand in 2015,” J.P. Morgan stated.
“Finally, the stronger dollar may also weigh on [Caterpillar’s] competitiveness against its international competitors and, given that senior executive compensation is based partly on market share, we would expect pricing to come under increasing pressure as we go forward.”
The company exposure to the once booming, and now slowing Canadian oil sands market has also impacted it on this front.