UPDATE: J.P. Morgan Reiterates Neutral On Valspar On F2014 EBITDA And Earnings Estimates

In a report published Wednesday, J.P. Morgan analyst Jeffery Zekauskas reiterated a Neutral rating on Valspar

but lowered the price target from $71.00 to $70.00. In the report, J.P.Morgan says "We reduced our F2014 EPS estimate for Valspar from $4.25 to $4.10 to reflect a lower level of profitability for Valspar's Coatings segment primarily related to the acquisition of the lower-margin Inver industrial coatings business in Europe. Our GAAP EPS projection is $3.78 including $0.32/share in restructuring and acquisition related expenses. Our F2014 EPS forecast is based on 8% consolidated sales growth including a 3-4% acquisition benefit from Inver and 2-3% growth from higher sales at Ace hardware stores (+$45M), B&Q (+38M), and Pro Paint sales at Lowe's (+$17.5M). We forecast the consolidated operating margin to improve slightly from 12.8% to 12.9%. Pre-tax restructuring savings of $12-13M ($0.10/share) related to Valspar's North American manufacturing assets following the Ace acquisition and the integrating of Inver in Europe, should be mostly offset by higher compensation-related accruals. Our F2014 EPS forecast reflects a lower share count of an average 86.8M compared to 90.5M in the year-ago period." Valspar closed on Tuesday at $70.93.