Bank Of America Downgrades Dover Corp

Bank of America downgraded Dover Corp DOV Friday from Buy to Neutral and cut its price target from $93 to $85 due to energy forecasts.

Analysts led by Andrew Obin lowered their 2015 “Energy top-line forecast from roughly flat to down 6 percent and 2016 Energy top-line from up 6 percent to flat as the lag on rig count decline will likely continue to be a headwind to artificial lift sales in 2016.”

“While we still think DOV’s Energy businesses are best in class, with among the highest returns relative to oil services peers, we think industry fundamentals overall will remain weak in ’15 and an overhang to the stock. We lower DOV to Neutral as we still think DOV has a solid portfolio of high return assets that screens as inexpensive relative to the group on a ROIC and ROTA basis (the primary metrics we use for capital allocation stories),” according to Obin

The analyst report concluded that “Though Energy has become a larger and more important part of DOV’s portfolio, we highlight that DOV’s multiple shows limited correlation to the price of oil, which we attribute to the company’s diversified business model and solid returns.

"Though slower oil & gas spending next year will likely be a headwind for DOV’s earnings, we think DOV’s multiple is sustainable and will likely not deteriorate similar to pure-play oil & gas services companies.”

Dover Corp closed at $75.94 Thursday, down 1.31 percent.