Deutsche Bank Downgrades Dover Corp Despite Outsized Exposure

Deutsche Bank downgraded Dover Corp DOV Tuesday from Hold to Sell and cut its price target from $83 to $65.

Analyst John G. Inch commented that “Dover’s outsized exposure to the oil & gas industry among multi-industry companies is widely appreciated, in our opinion. However, that doesn’t make the business any less risky or less vulnerable to industry contraction.

We believe these risks are compounded by Dover Energy segment margins that exceed 24 percent – well above industry peers and accounting for over one-third of company profits.”

“Dover expects its Energy segment to realize just flat to down 3 percent organic revenues next year. The company struck an optimistic if not even somewhat upbeat tone at yesterday’s annual investor meeting,” according to Inch.

Inch believed the Energy segment’s “annual run-rate of contraction is more likely to approach down 7 percent. Moreover, this decline appears unlikely to more meaningfully kick in until the second half of next year while heavily spilling into 2016, barring a recovery in oil prices.”

The firm cut its EPS forecast estimates to $5.15 in 2015, down $0.15, and to $5.40 in 2016, down $0.50.

The downgrade also follows a similar action by Bank of America.

Dover Corp recently traded at $73.20, down 0.76 percent.