J.P. Morgan Raises Valspar PT To $38 (VAL)

J.P. Morgan raised its Valspar VAL price target to $38 from $33 in a research report published today. In the report, J.P. Morgan states, "Valspar's F1Q:11 pro forma EPS improved 8% from $0.36 to $0.39, and GAAP EPS was flat at 0.34. Pro forma profits were penalized by higher raw material costs (acrylic resins and TiO2) of an estimated 10-15%. In summary, consolidated sales grew 25% from $672Mn to $842Mn due to an estimated 5-6% higher volumes, 4% higher price/mix, and a 15% benefit from the Wattyl acquisition. Consolidated pro forma operating profits increased 10% from $64Mn to $71Mn. Pro forma margin slipped (110) basis points from 9.5% to 8.4% reflecting the raw material cost inflation. We maintain our F2011 pro forma EPS forecast of $2.55. F2011 EPS growth should be assisted by the acquisition of Wattyl in Australia, which could add $400Mn in sales and $7Mn in EBIT ($0.05/share)." Shares of Valspar closed Monday at $38.29, reflecting no change from Friday's market close.