Dover Slides on Updated Guidance and Acquisition Investigation

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Dover Corp. (NYSE: DOV) shares slid early on Monday after the company issued a business update for the third quarter and the rest of the year. Unfortunately, this update was not what investors were looking for.

The primary factors driving this revision are generally weaker capital spending across several industrial end-markets, continued weakness in longer cycle oil and gas exposed markets, and continued headwinds in its retail refrigeration business related to production inefficiencies.

The company expects full-year revenue to decline in the range of 4% to 5%, compared to a previous revenue forecast of a decline in the range of 3% to 5%. The revised forecast includes organic revenue declining 7% to 8%, as compared to the prior organic forecast of a decrease of 6% to 8%.

Unchanged from the prior forecast are Dover’s expectations for 7% growth from completed acquisitions, a decrease of 3% from dispositions and a −1% impact from foreign currencies.

As for the immediate future, the third-quarter earnings per share (EPS) are expected to be in the range of $0.81 to $0.83. For the full year, the company expects to have EPS in the range of $3.00 to $3.05, versus the previous guidance of $3.35 to $3.45.

Thomson Reuters consensus estimates are calling for the third quarter to have $1.02 in EPS and for the full-year to have $3.34.

Dover also announced that its pending acquisition of Wayne is now expected to close in the first quarter of 2017, driven by the U.K. Competition and Markets Authority’s (CMA) decision to refer the acquisition for a Phase 2 investigation. Note that a Phase 2 investigation can be avoided if the company offers remedies that resolve concerns about the competitive overlap in the supply of fuel dispensers in the United Kingdom.

Shares of Dover were last seen down 6.3% at $67.64, with a consensus analyst price target of $73.53 and a 52-week trading range of $50.91 to $74.90.

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