J.P. Morgan Lowers Fortune Brands 2011E

While Fortune Brands, Inc. FO has expanded its retail channel presence, most recently this September with the introduction of the Martha Stewart cabinet line at Home Depot, as well as FO producing the vast majority of Lowe's finished and unfinished in-stock cabinetry, and the rollout of new selling centers at 650 Lowe's stores by year-end, J.P. Morgan reports that the impact of these actions will not begin to be realized from a revenue perspective until 2011, with a fuller impact in 2012. “Finally, FO continues to expect margins to be up in the range of 200 bps YOY,” J.P. Morgan writes. “As a result, we slightly lower our 2010 sales growth estimate to 7.4% from 8.1%, and lower our margin 20 bps to 7.1%, and our 2011E by 40 bps to 7.7%.” Fortune Brands currently trades at $54.46.