Goldman Sachs Downgrades Esterline, Removes From 'Buy' List

In report published Thursday, analysts at Goldman Sachs downgraded

, while removing the company from the Americas Buy List. The price target is set to $124. The analysts believe there is long-term upside potential for the company's stock, while its new management team is likely to be able to successfully execute a strategy to improve its operating margins and ROIC. "However, with the trajectory of improvement recorded the past few quarters, certain near-term end-market headwinds, the 11-month year challenge, and a share price similar to when disappointing results started, we think it makes sense for investors to move to the sidelines and wait for more clear evidence the operational turnaround is underway," the analysts said. Although Goldman Sachs expects the new CEO to be able to bring about a turnaround, the progress made so far has led to some concerns regarding the timing and the pace of this turnaround. The company is also likely to face potential near-term headwinds in its short cycle Gaming, Energy and Defense segments. On the other hand, Esterline continues to generate strong cash flow, and expectations for the company's performance have been set fairly low, as reflected by the consensus projections.