UPDATE: J.P. Morgan Upgrades Masco Corporation on Reasonable Valuation

In a report published Wednesday, J.P. Morgan analyst Michael Rehaut upgraded the rating on Masco Corporation MAS from Underweight to Neutral, and raised the price target from $20.00 to $21.00. In the report, J.P. Morgan noted, “We rate MAS Neutral, as we view the company's valuation as reasonable against our 2015E, which is not based on overly aggressive assumptions and for which we believe a fair degree of visibility exists given this point in the cycle. Specifically, while currently trading at 26x and 19x our 2013E and 2014E EPS, respectively, we note that MAS is trading at only 14x our 2015E EPS, which we note is roughly in-line with its longer-term historical average forward multiple and hence we believe is reasonable given this point in the cycle. Additionally, we note that MAS is also currently trading at 8.4x and 6.9x our 2014E and 2015E EBITDA, respectively, which compares favorably to the company's historical average of 9-10x. Lastly, we note that MAS' P/E and EV/EBITDA multiples against our 2015E currently represent 14% and 17% discounts, respectively, to FBHS, which we believe is reasonable given FBHS' stronger track record of share gains and stronger balance sheet.” Masco Corporation closed on Tuesday at $19.40.
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Posted In: Analyst ColorUpgradesAnalyst RatingsJ.P. MorganMichael Rehaut
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