Bank of America has maintained its ‘buy’ rating on Caterpillar Inc (NYSE:CAT, XETRA:CAT) despite warning that its valuation could fall further as uncertainty over data centre investment persists. The bank noted that Caterpillar’s valuation multiple had fallen from 30 times earnings to 17 times in four months, reflecting investor concerns about potential changes to data centre investment following the US midterm elections. A further decline to 10 to 13 times earnings remains possible if profits have peaked or an industrial recession emerges, although Bank of America does not consider this its base case. Caterpillar’s current valuation also appears relatively inexpensive against other machinery and power equipment companies, the bank argued. Its analysis puts Caterpillar at a roughly 40% discount to Deere, its machinery industry bellwether, representing the widest valuation gap seen in recent years. Applying a 17 to 18 times earnings multiple to Caterpillar’s machinery business impl