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Citi analysts upgraded H.B. Fuller Company (NYSE:FUL) to Buy from Neutral with a price target raised to $85 per share, up from the prior $72.
The analysts highlighted two key reasons behind the upgrade call: 1) more attractive valuation, and 2) improving margins.
“FUL’s margins will be helped by price-cost and innovation into megatrends, including packaging sustainability, auto/EVs, and clean energy. Plus, China re-opening post CNY and improving growth prospects into 2H is a positive for the highest margin business, Engineering Adhesives, as China accounts for ~30% of segment sales and ~13% for overall FUL,” they wrote in an upgrade note.
The analysts also added that new CEO Mastin’s priorities seem to be tied to margin expansion and organic sales growth.
“Focus is on sustainability initiatives in packaging, including compostable (paper straws) and recyclable glues, in addition to pressure-sensitive adhesives replacing HDPE plastic rings for multipack aluminum cans,” the analysts added.
FUL shares are up 2.5% year-to-date (YTD).
