UPDATE: Goldman Sachs Initiates Coverage on Kaydon Corporation with Sell Rating, $23 PT on High Uncertainty, Downside Risk

In a report published Monday, Goldman Sachs analyst Samuel H. Eisner initiated coverage on

with a Sell rating and $23.00 price target. In the report, Goldman Sachs noted, “We initiate coverage on Kaydon at Sell with a $23, 12-month price target, implying 16% downside risk (vs. 7% average upside for our coverage). Following a significant recapitalization of the organization as well as a material write-down of assets related to the wind industry, we believe that uncertainty regarding the long-term strategic direction remains high. Further, our 2013/2014 EPS estimates of $1.57/1.73 are 5%/6% below consensus and reflect low operating margin expectations. As KDN has lower operational leverage than other short-cycle companies in our universe given the more niche/customized product focus versus companies that are more driven by volume in nature (Exhibit 4), we expect the shares to underperform in a rising capex environment Additionally, while investor attention rests on KDN's cash generation and dividend yield, we remain focused on the weaker relative EPS growth, which is the basis for positioning in our universe.” Kaydon Corporation closed on Friday at $27.55.