J.P. Morgan Lowers FUL Rating From OW To Neutral

J.P. Morgan is lowering its rating on H. B. Fuller FUL shares from Overweight to Neutral. “We do not find the stock especially attractive at the current price,” J.P. Morgan writes. “Fuller trades at 6.6x our F2011 EBITDA estimate compared to a peer group average of 7.0x and versus 5.0x for Overweight-rated Ashland and Eastman. “Fuller's profits in the prior quarter (3Q:F10, ended August) were lower sequentially, reflecting high raw material costs, lagging price increases, and weak domestic sales to construction-related markets. “It remains to be seen how quickly the company will overcome these obstacles and restore profitability. In addition, the recent unexpected departure of the CEO Michele Volpi adds to uncertainty over the longer term company strategy.” J.P. Morgan maintains its F2011 EPS estimate of $1.75 and its F2012 EPS projection of $2.00. “Our Q4:F10 (ended November) EPS forecast of $0.45 remains unchanged,” J.P. Morgan concluded.