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On Thursday, Baird analysts upgraded HB Fuller stock (NYSE:FUL) from a Neutral to an Outperform rating, maintaining a price target of $60.00. The decision is rooted in what the analysts perceive as an attractive long-term outlook for the company, despite current visibility challenges. According to InvestingPro data, the stock has experienced a significant decline of 34% over the past six months, trading at $52.35, suggesting potential upside to Baird’s target.
The upgrade comes as a part of Baird’s first-quarter earnings preview for 2025, where analysts highlighted the secular appeal of HB Fuller. They noted that the lowered near-term visibility for the company has been more than accounted for in the recent compression of its valuation multiples over the past year. Baird analysts believe that the current stock price does not fully reflect HB Fuller’s potential.
The $60.00 price target set by Baird is based on approximately 15 times their fiscal year 2025 earnings per share (EPS) estimate of $4.00. This target remains unchanged from their previous assessment, signaling a consistent valuation approach by Baird’s analysts. Currently, HB Fuller trades at a P/E ratio of 27.27x and an EV/EBITDA of 9.33x, with InvestingPro analysis suggesting the stock is slightly undervalued based on its proprietary Fair Value model.
In their commentary, the analysts expressed a positive outlook, citing, "Opportunistic on valuation dislocation. As part of our 1Q25 earnings preview, we are raising our rating on the shares of H.B. Fuller to Outperform—a franchise that we view as secularly attractive over the long term, with lowered near-term visibility more than reflected via valuation multiple compression over the past year."
The upgrade by Baird suggests confidence in HB Fuller’s ability to navigate through current market conditions and emerge as a strong performer in the long run. The analysts’ unchanged price target of $60.00 indicates a belief that the company’s stock will rise to meet this valuation. InvestingPro data reveals the company’s strong financial foundation, with 32 consecutive years of dividend increases and a healthy current ratio of 1.97. For deeper insights into HB Fuller’s valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, H.B. Fuller reported its first-quarter 2025 financial results, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.54, compared to the projected $0.50. The company also exceeded revenue forecasts, reaching $789 million against the anticipated $769.56 million. Additionally, H.B. Fuller announced a 5.6% increase in its regular quarterly cash dividend, marking the 56th consecutive year of dividend growth, with the new dividend set at $0.2350 per share. In corporate governance news, shareholders approved the executive compensation plan and the third amendment of the 2020 Master Incentive Plan during the company’s recent annual meeting. The appointment of Ernst & Young LLP as the independent auditor for the fiscal year ending in 2025 was also ratified. Furthermore, all directors standing for election were re-elected for another term. These developments reflect H.B. Fuller’s ongoing commitment to shareholder value and corporate governance.
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