Deutsche Bank Comments On Dover Ahead Of Analyst Day

Dover's

4Q set-up is conservative, as B/B was weak at 0.96x but this is not untypical and has actually increased 4Q core ests by 2-3%. Looking ahead to Dover Day next month, it sees the potential for an update on sourcing and other key initiatives (portfolio, shared services?) as well as an FY11 framework where DB see $3.70-4.00 as a pretty conservative outlook. Dover Day, where Deutsche Bank sees the potential for a number of positive catalysts including an update on savings from strategic procurement and a portfolio update where it expects management to reaffirm its commitment to lowering exposure to more volatile end-markets. The highlight will likely be the FY11 framework which DB believes will put an upward bias to current consensus at $3.80. Based on very modest 3-5% core revenue growth and procurement savings in excess of $100m, DB believes it is easy to drive earnings well north of $4 in FY11. However if we apply contingencies related to SemiCap and potential raw material headwinds, we believe a range of $3.70-4.00 is actually fairly conservative. Deutsche Bank has a Buy rating on DOV with a $61 TP DOV closed Monday at $53.40