Goldman Sachs has downgraded PolyOne Corporation POL to Neutral from Buy, saying that the "organic growth remains elusive" for the provider of polymer materials, services and solutions.
The downgrade comes despite the company's second-quarter EPS of $0.63 topped consensus estimate of $0.61, and management still expects double-digit EPS gains for the year.
"[W]e believe 2H16 growth comparisons are likely to decelerate, as organic growth for its key Color and Engineered Materials business remains elusive and macroeconomic trends lackluster. Absent improvement in top-line growth metrics and an upward earnings revision bias, our above-consensus estimates and enthusiasm for the shares appear too ambitious," analyst Robert Koort wrote in a note.
Reflecting a more subdued growth expectation, Koort cut his EPS estimates for 2016/17/18 by 3 percent each to $2.16/$2.40/$2.67 and lowered his price target by $4 to $38.
"We believe POL possesses a well-focused strategy capable of attractive growth but believe greater validation is required," Koort added.
At time of writing, shares of PolyOne had fallen 4.22 percent on the day to $35.16.
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