Construction machinery of the US producer Caterpillar can be seen at the BLG Logistics Group Car Terminal, ready for shipping in Bremerhaven, Germany, 12 June 2017. Photo: Ingo Wagner/dpa (Photo by Ingo Wagner/picture alliance via Getty Images)

Caterpillar shares fell Tuesday after UBS double downgraded the shares, citing slowing global construction demand.

UBS downgraded Caterpillar from buy all the way to sell and lowered its 12-month price target to $125 from $154 a share. Caterpillar shares dropped 3.5 percent in premarket trading to $136.45.

"We believe 55 percent of CAT's end markets will peak in 2019, pressuring revenue and margins in 2020 as demand declines," analyst Steven Fisher said in a note from late Monday. "We expect 2020 EPS to decline 8 percent YoY, as continued growth in mining and buybacks will not be enough to offset headwinds in construction and oil & gas."

Caterpillar shares dropped 19 percent as the U.S. and China faced off on tariffs and concern started to creep into the market that global growth was slowing, regardless of the outcome of trade talks. The shares bounced back in 2019, up 11 percent through Monday.

"We forecast an 8 percent decline in [construction] sales (consensus ~flat) and ~100bps of margin compression in 2020 (consensus -30bps) driven by lower demand in NA, China, & EMEA," Fisher said.