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Investing.com - HB Fuller (NYSE:FUL) received an upgrade from Seaport Global Securities on Friday, which raised its stock rating from Neutral to Buy with a price target of $80.00. According to InvestingPro data, the stock currently trades at an EV/EBITDA multiple of 9.2x, with analysis suggesting the company is currently undervalued relative to its Fair Value.
The research firm cited growing confidence in HB Fuller’s margin expansion potential driven by lower costs and mix improvement. Despite volume declines, the adhesives manufacturer increased its EBITDA margin by 110 basis points year-over-year, demonstrating effective execution on pricing, procurement, portfolio repositioning, and manufacturing optimization initiatives. The company maintains a strong financial position with a current ratio of 1.93 and has consistently rewarded shareholders, maintaining dividend payments for 55 consecutive years.
Seaport Global highlighted that HB Fuller’s Engineering Adhesives segment led in organic growth and margin expansion, delivering 14% year-over-year EBITDA growth through new business wins and strategic acquisitions. The Building Adhesive Solutions segment outperformed underlying markets despite challenging prior-year comparisons, benefiting from exposure to data center construction and Middle East expansion.
The firm noted potential headwinds in the Hygiene, Health & Consumables segment, which showed weakness in underlying markets, partially offset by growth in Medical applications. Looking ahead to fiscal year 2026, Seaport Global believes HB Fuller has approximately $25 million in price/cost tailwinds, primarily in the first half.
The $80 price target represents 9.1x Seaport Global’s forward twelve-month EBITDA estimate, compared to HB Fuller’s current valuation of 7.8x and three-year average of 9.0x. The firm also pointed to an estimated fiscal year 2026 free cash flow yield of 6.4%, with near-term cash flow allocated to debt reduction before resuming bolt-on acquisitions.
In other recent news, H.B. Fuller Company announced its third-quarter earnings, showcasing a slight earnings per share (EPS) beat with a reported EPS of $1.26, just above the forecast of $1.25. However, the company experienced a revenue shortfall, reporting $892 million against the anticipated $896.55 million. This revenue miss has raised concerns among investors, particularly in light of the broader economic environment. Despite the earnings beat, the revenue figures have been a focal point for market analysts. These recent developments underscore the challenges the company faces in aligning its financial performance with market expectations. Investors and analysts alike are closely monitoring how H.B. Fuller navigates these financial results. The company’s ability to address these issues will be critical in shaping future investor sentiment.
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