Caterpillar, the world’s largest maker of mining equipment was downgraded to underperform from neutral with a $115 price target by a Bank of America analyst who cited a severe capital-spending downturn in energy and mining.

“The traditional playbook has been to buy CAT in the depths of recession as central banks inject massive monetary and fiscal stimulus to guide a global recovery,” analyst Ross Gilardi said in a note to clients.

“We don’t subscribe to this theory this time. Energy and mining stocks are signaling another severe capital-spending downturn in two of CAT’s most important end markets that are as much structural as cyclical."

The analyst added that "we are not holding our breath for a federal infrastructure bill," noting a March 31 tweet by President Donald Trump floating the idea of a $2 trillion infrastructure bill as the next stage of fiscal stimulus in response to the coronavirus outbreak.

The Street reported that while Caterpillar derives only 10 percent of revenue directly from oil and gas, Gilardi said, the Deerfield, IL., company's construction and mining products touch the energy sector in many places.

“We take limited solace in CAT’s bias toward natural gas as prices hover at 20-year lows on chronic oversupply with natural gas production projected to fall 4.4 percent in 2021 according to the Energy Information Administration,” the analyst said.

Gilardi also said investors are sensing a bottoming in earnings in the second quarter and looking to get ahead of it.

Caterpillar has outperformed the S&P 500 off the market lows on March 23, he said, rising 36 percent compared with a 25 percent increase in the S&P 500.

Last week, a news report said the company was in talks with banks to raise a new $3 billion nine-month revolving-credit facility to bolster its liquidity.

Caterpillar withdrew its earnings forecast for this year last month due to the coronavirus pandemic.