UPDATE: ISI Group Upgrades Fortune Brands Home & Security to Strong Buy

In a report published Monday, ISI Group upgraded Fortune Brands Home & Security

from Buy to Strong Buy with a $38 price target. ISI Group noted, “In conjunction with ISI Group's adoption of a changed ratings system, we are assigning a Strong Buy rating to FBHS, with a Price Target of $38, implying 23% upside over the next year. Our prior rating was a Buy rating with a 15% required return target, while our new Strong Buy rating targets greater than 20% appreciation. We are raising our Price Target to $38 from $33 while also introducing our initial 2014 EPS estimate. Our 2014 estimate is $1.79 per share, up 37% from our 2013 $1.31 estimate. We believe the 2014 estimate is conservative, particularly on revenue growth and the incremental operating margin level. We prefer waiting until 2012's 4Q results are in and management commentary given, before moving our numbers higher. However, we do not feel that potential increase is necessary in justifying our PT. Our $38 level implies 2014 multiples that are below 2013 multiples generated by the current equity price. The PT multiples of our 2014 estimates are: PE 21.2X, EV/DBITDA 11.5X and FCF Yield of 5.0%.” Fortune Brands Home & Security closed on Friday at $30.89.