While investors are increasingly concerned about what the construction industry will do during the recession, Bank of America is increasingly bullish on Caterpillar. Analyst Michael Feniger upgraded the stock to buy from neutral. His price target of $295 implies a 15.7% gain from Thursday’s closing stock price. “While CAT is vulnerable to a downturn, some unique dynamics from a macro and business cycle perspective could underpin earnings ‘bottom’ significantly higher than expected,” Feniger said in a note. Note to customers. “We believe there is an underrated roadmap that can bring the CAT story to the forefront and drive outstanding performance.” Feniger said the stock will be short-term protected from broader macro uncertainties in Q4 2022 and Q1 2023 due to headwinds from the upside. He called the price increase in the third quarter of 14%, the highest in a decade, an “inflection point”. However, the company’s backlog is likely to shrink due to the impact of recession concerns on demand. However, he said leading indicators are likely to improve in the second half of the year and suggest a scenario where a recession can be avoided. Headwinds unique to the company are also improving. He noted that the company’s focus on electric and autonomous vehicles is an innovation that will help the company in the long term. Feniger said investors will look back at the company’s earnings per share in 2023 and be genuinely surprised as China reopens, capital goods spending picks up and the move into construction projects. larger will help offset the loss caused by the worsening economic context. The full-year growth outlook is positive, he said. — Michael Bloom of CNBC contributed to this report.