UPDATE: Deutsche Bank Downgrades HB Fuller on Best-in-Class Execution, Full Valuation

In a report published Friday, Deutsche Bank analyst David Begleiter downgraded the rating on

from Buy to Hold, but reiterated the $50.00 price target. In the report, Deutsche Bank noted, “Fuller has done an exceptional job driving earnings growth over the past 2 yrs (18% CAGR ‘12-‘13E) via the accretive Forbo acquisition and removing $90MM, or $1.25/shr in costs. However, with Fuller shares up 50% over the past 12 months vs 15% for the S&P, we believe relative outperformance will be limited in the near term due to: i) Valuation: Fuller is trading at 14.9x ‘14E EPS vs its 3 yr NTM P/E of 12.5x; ii) Volume growth: This has been Fuller's greatest challenge over the years and remains so today highlighted by YTD volume growth of 0.5% and iii) ~75% of Fuller's targeted margin improvement by '15E has been realized. With 10% upside to our $50 PT, we downgrade to Hold.” HB Fuller Co. closed on Thursday at $45.44.