UPDATE: KeyBanc Capital Markets Initiates Hold on Fortune Brands

KeyBanc Capital Markets initiates its coverage on Fortune Brands

with a Hold rating as the stock is fully valued amid the slow recovery, despite a well managed and leading portfolio. KeyBanc Capital Markets says, "FBHS is well positioned for the slow recovery in U.S. housing with 65% of sales to U.S. residential markets, but near term we think its higher priced discretionary categories will limit earnings upside. We expect FBHS to continue delivering growth above its served categories, augmented in time with acquisitions, but we expect its growth to be diluted by a challenged industry structure that limits operating leverage near term. We model EPS of $0.62 in 2011, $0.68 in 2012 and $0.85 in 2013, largely in line with a broad consensus range." FBHS closed at $17.81 per share on Thursday.