Valspar Downgraded To Neutral

JP Morgan has downgraded Valspar Corporation VAL from Overweight to Neutral and has lowered the price target from $35 to $33. In the report, JP Morgan writes "We believe that it could prove difficult for Valspar to pass through much price increase in the calendar 4th quarter and in the 1st calendar quarter of the New Year given usual winter paint seasonal weakness and industry pricing patterns. Paint raw material prices in TiO2 have moved up sharply, and there may be acrylic price increases in store given the recent rise in oil. Valspar will also compare itself against especially strong volume comparisons in its March quarter versus tax-incentivized construction strength in F2Q:10. There is quarterly earnings risk ahead, and we think it better to move to the sidelines to await possible negative price volatility for a better entry point into the shares. Accordingly, we reduced our year-ahead earnings projections, and lowered our investment rating from Overweight to Neutral." Valspar Corporation closed yesterday at $32.39.