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On Tuesday, Baird reiterated its Outperform rating on HB Fuller (NYSE:FUL), maintaining a price target of $60.00. The firm’s analyst highlighted the company’s current operational focus, stating, "Noting that the company is firmly in execution mode as it relates to its 20% EBITDA margin target (cost optimization/portfolio reshaping), we believe that FUL is in the early stages of evolving into a high-quality earnings compounder." The company’s current EBITDA stands at $538 million, with a healthy gross profit margin of 30%, according to InvestingPro data.
The analyst further pointed out the potential for HB Fuller’s strategic financial management, emphasizing the use of free cash flow. "Noting also that there is a natural conduit for FCF allocation on a multi-year basis (towards acquisitions in the global adhesives industry)," the analyst added, indicating that HB Fuller’s financial strategy could involve acquisitions that strengthen its position in the adhesives market. InvestingPro data shows the company maintains strong liquidity with a current ratio of 1.97, while management has demonstrated shareholder-friendly policies through aggressive share buybacks and 55 consecutive years of dividend payments.
Despite recent challenges in the stock’s valuation, Baird’s stance on HB Fuller remains positive. The analyst mentioned, "Accordingly, and in context of the stock’s substantial de-rating since the most recent peak (3Q24), we remain Outperform-rated on FUL—a name that is also currently a Top Pick." This statement underscores the firm’s belief that HB Fuller’s stock is undervalued following a decline from its peak in the third quarter of 2024. Indeed, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with the shares down 31% over the past year. For deeper insights into HB Fuller’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
The affirmation of the Outperform rating and the $60.00 price target by Baird suggests confidence in HB Fuller’s strategic initiatives and its capacity to achieve its financial goals. The company’s focus on cost optimization and portfolio reshaping, along with its approach to free cash flow allocation, are seen as key factors in its trajectory towards becoming a more robust earnings entity.
Baird’s continued endorsement of HB Fuller as a Top Pick reflects an optimistic outlook on the company’s future performance, suggesting that the firm anticipates a positive market response to the company’s ongoing and future actions.
In other recent news, H.B. Fuller Company reported financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an adjusted earnings per share (EPS) of $0.54, exceeding the forecasted $0.50, while revenue reached $789 million, above the anticipated $769.56 million. Organic revenue grew by 1.9% year-over-year, and EBITDA was recorded at $114 million, aligning with the high end of the guidance range. In addition, H.B. Fuller announced an increase in its regular quarterly cash dividend from $0.2225 to $0.2350 per share, marking the 56th consecutive year of dividend growth.
Furthermore, H.B. Fuller shareholders approved the executive compensation plan at the recent Annual Meeting. This included the re-election of three directors and the ratification of Ernst & Young LLP as the independent auditor for the fiscal year ending November 29, 2025. The approval of the third amendment to the 2020 Master Incentive Plan also indicates shareholder support for aligning executive compensation with company performance.
In analyst activity, Baird upgraded H.B. Fuller stock from Neutral to Outperform, maintaining a price target of $60.00. This decision reflects confidence in the company’s long-term potential, despite current visibility challenges. Baird analysts highlighted the secular appeal of H.B. Fuller and believe that recent valuation compression has already accounted for lowered near-term visibility.
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