Ahead of the Bell: Caterpillar

NEW YORK (AP) -- Weak spending in the mining industry will be a drag on growth for Caterpillar for the next several years, Jefferies & Co. said Wednesday, as it cut its price target on the company's shares.

Analyst Stephen Volkmann believes company guidance for this year may be too high, and he said that other analysts have cut estimates this quarter.

Volkmann said he now expects a 2013 profit of $7.40 per share on $60.9 million in revenue. Analysts polled by FactSet expect $7.69 per share on $62.66 billion in revenue.

Volkmann cut his price target by $20 to $75, saying that mining capital spending plans point to a multi-year decline, which will result in three years of minimal earnings growth for Caterpillar as lower growth in that industry offsets a rebound in the construction industry.

The International Monetary Fund lowered its outlook for the world economy on Tuesday, predicting that government spending cuts will slow U.S. growth and keep the euro currency alliance in recession.

China reported quarterly economic growth of 7.7 percent this week, which was below the 8 percent expected by private sector forecasters who relied on Chinese trade and other data.

Caterpillar started 2012 expecting the U.S. economy to grow at least 3 percent but economists estimate annual growth was a little more than 2 percent. In April, the company was still forecasting 8.5 percent growth in China, but the world's second-largest economy expanded by 7.8 percent last year, its weakest annual performance since the 1990s.

Caterpillar shares fell 86 cents to $81.75 in premarket trading.