On Tuesday, Citi made a slight adjustment to the stock price target for HB Fuller (NYSE:FUL), increasing it to $85.00 from $83.00, while keeping a Neutral rating on the stock. Currently trading at $76.96, the stock sits between analysts' targets ranging from $70 to $95.
According to InvestingPro data, HB Fuller boasts an impressive track record of maintaining dividend payments for 54 consecutive years, with 32 years of consecutive increases. The adjustment comes as the analyst anticipates providing pro-forma details during the company's fiscal year 2024 reporting in January.
The analyst at Citi has made updates to the models for the fiscal years 2025 and 2026 to account for the recent deal and re-segmentation effects on HB Fuller. These changes include a downward revision of approximately $1 million to the FY25 EBITDA estimate, which reflects the net impact of mergers and acquisitions (M&A) and divestitures.
Conversely, the FY26 earnings per share (EPS) estimate has been increased by roughly $2 million, thanks to anticipated modest commercial synergies in the Medical (TASE:PMCN) Adhesives business.
The revisions to the EPS figures are described as minimal, with the decrease in depreciation and amortization (D&A) expenses being largely offset by slightly higher assumed interest rates. For the 2025 estimates, the analyst has applied a price-to-earnings (P/E) multiple of approximately 17.5 times, up from the previous 17 times, and an enterprise value to EBITDA (EV/EBITDA) multiple of around 10.3 times, slightly up from the former 10 times.
Moreover, the analyst has added roughly $110 million to the projected net debt, taking into account the net cash outflow from the transactions.
Nevertheless, the firm remains cautious and has decided to maintain a neutral position on HB Fuller shares, citing uncertainties in consumer demand, particularly in the automotive, solar, and general durable goods sectors.
In other recent news, H.B. Fuller has seen significant developments in its operations and strategic direction. The company recently sold its Flooring unit to Pacific Avenue Capital Partners (WA:CPAP), a move expected to generate about $80 million.
Simultaneously, H.B. Fuller acquired two medical adhesive technology companies, GEM and Medifill, for a combined total of €180 million. These acquisitions are expected to contribute a combined net revenue of €23 million and adjusted EBITDA of €11.5 million in 2024.
In the wake of these changes, H.B. Fuller has consolidated its building and construction segments into a single entity named the Building Adhesive Solutions unit, which reported approximately $850 million in net revenue and roughly $130 million in adjusted EBITDA for the fiscal year 2024.
In leadership changes, Teresa J. Rasmussen will succeed Lee R. Mitau as Chair of the Board of Directors in 2025. Moreover, Traci L. Jensen, the company's Executive Vice President and Chief Administrative Officer, announced her retirement effective November 2024, with a successor expected to be announced in the coming months.
On the financial front, H.B. Fuller reported a 6% rise in adjusted EBITDA to $165 million in the third quarter of 2024. The revised 2024 guidance includes net revenue growth of approximately 2%, adjusted EBITDA between $610 million and $620 million, and adjusted diluted EPS projected to be between $4.10 and $4.20. These are the recent developments in H.B. Fuller's operations and strategic direction.
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