J.P Morgan Raises Estimates & Raises The PT On Fortune Brands To $62

Fortune Brands FO reported 4Q Operating EPS of $0.63, above J.P Morgan's $0.56E and the Street's $0.58. Against JPM's estimate, Spirits sales, Home and Security margins and Golf margins represented $0.07 and $0.05 and $0.02/share of upside, respectively; this was partially offset by Spirits margins, Golf sales and higher interest expense, which represented $0.06, $0.01 and $0.01/share of downside, respectively. Also, the company noted that the initiative to separate its businesses is on track for completion in 2H11. Lastly, the company issued 2011 EPS guidance of a high-single-digit to high-teens YOY growth rate off its 2010 adjusted EPS base of $2.81 whose midpoint of $3.18 is above its $3.08E but below the Street's $3.36; also 2011 FCF guidance of $450-$525 million was issued. J.P Morgan maintains a Neutral rating on FO, and raise the PT from $55.00 to $62.00, it still views the stock as fully valued, while at the same time, given today's LBO-oriented market, only relatively modest downside to the stock exists as well. FO closed Friday at $62.09