J.P. Morgan Increases EPS Forecast On FUL

J.P. Morgan has increased its EPS forecast on H. B. Fuller FUL from $1.75 to $1.80 for F2011 (ends November). “Our estimate increase reflects a 32% tax rate forecasted by Fuller, which is 2 points lower than our previous projection of 34%,” J.P. Morgan writes. “We raised our F2012 EPS projection from $2.00 to $2.05 for similar reasons. The shares rose $3.00 yesterday or more than 10% (S&P +0.9%) as investors evidently assumed a darker outlook from the company for F2011, given raw material headwinds and a weak construction market. “The company's own expectation of 20% operating income growth for F2011, a generally lower-than expected tax rate, and a broad optimism about the coming year contrasted to that pessimism. Finally, there was probably some investor anxiety concerning Fuller's financials, given the abrupt departure of its previous CEO Michele Volpi in November. The operating results indicated business as usual.” H. B. Fuller currently trades at $23.00.