Goldman Sachs Downgrades Dover Corp. (DOV) to Sell

Goldman Sachs downgraded Dover Corp. (NYSE: DOV) from Neutral to Sell with a price target of $69.00.

Analyst Joe Ritchie said, "We downgrade shares of DOV to Sell from Neutral with 10% potential downside to our $69 12-month price target vs. an average +3% upside for its peers. While we recognize that the shares have sold off 5.1% vs. our Multis coverage since the OPEC announcement on Thursday, we believe there is downside risk to DOV shares as EPS expectations are still too high and DOV’s multiple typically trades at a 20-30% discount to the S&P when oil prices decline > 10%. Notably, DOV is trading at 5 year highs vs. the OSX on a P/E NTM basis and DOV has outperformed the OSX by 1,000bps over the last month."

"Three key points underpin our Sell thesis: (1) Consensus underestimates the impact of lower oil prices to DOV’s Energy business; (2) Growth/margins for DOV’s remaining segments is uninspiring vs. coverage; and (3) B/S flexibility is more limited than perceived. As a result, we lower 2015/16E EPS by 8%/8% to $4.95/$5.45 (GS 2015/2016E EPS: -5%/-4% vs. consensus). Notably, we expect DOV’s 2014-2016E EPS to grow 7% (vs. the MI average of 11%). Given the lower growth profile, below-average returns (of 14.7%) and weak oil prices, our price target is based on a 20% discount to coverage," he added.

For an analyst ratings summary and ratings history on Dover Corp. click here. For more ratings news on Dover Corp. click here.

Shares of Dover Corp. closed at $75.03 yesterday.

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