2/9/2010- Morgan Stanley analysts are upgrading Caterpillar (NYSE:CAT) to "overweight," which is the first time the bank has been positive on the shares in three years of coverage.

Analysts Robert Wertheimer and Joseph O'Dea said, "We are now more bullish than consensus on both the pace of cyclical acceleration and on CAT's ability to deliver on its structural transformation and, potentially, $8-10 in earnings. Upside risk is material in 2-3 years if structural changes work. Our contacts in the supply chain tell us structural changes are real and are starting to work. In contrast, we think many investors are still highly skeptical, specifically on CAT's $8-10 earnings goal in 2012. We're not completely there yet either, but this feels like an area where too many are underestimating CAT."

Morgan Stanley has a $70 price target on the stock and sees fiscal 2010 EPS of $2.37, vs. the consensus estimates of $2.67, and fiscal 2011 EPS of $4.03, vs. the consensus estimates of $3.97.

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