Market Overview

Herman Miller's Tax Prospects Drive Raymond James Upgrade

Share:
Herman Miller's Tax Prospects Drive Raymond James Upgrade

Furniture maker Herman Miller, Inc. (NASDAQ: MLHR) reported encouraging fiscal second-quarter earnings last week, but one Wall Street analyst said the recently signed corporate tax cut will prove to be a more notable catalyst.

The Analyst

Raymond James' Budd Bugatch upgraded Herman Miller's stock rating from Market Perform to Outperform with a new $43 price target.

The Thesis

Herman Miller showed order growth in its Q2 report that stemmed from the enhancement of its product offerings and the streamlining of the dealer order process between all of its brands, Bugatch said in a Tuesday note. (See the analyst's track record here.)

Herman Miller continues to benefit from a strong economic environment that favors furniture demand, the analyst said. 

Perhaps more important, the passage of a corporate tax cut will likely provide an incentive for office furniture products through the immediate expensing of short-term capital assets, the analyst said. The same tax bill will reduce the company's effective tax rate from management's prior estimate of 29.5-31.5 percent to a new range of 26-28 percent.

Bottom line, Herman Miller's ongoing momentum coupled with benefits from tax policy on two fronts yields a favorable risk-reward profile for the stock, Bugatch said. Raymond James' upside scenario implies a 42-percent return versus a downside loss of just 15 percent.

Price Action

Shares of Herman Miller closed Tuesday at $39.05, up 2.90 percent. 

Related Links:

Every Company Already Celebrating Tax Reform Passage With Employee Bonuses

Tax Bill: What ETF Investors Need To Know

Photo courtesy of Herman Miller. 

Latest Ratings for MLHR

DateFirmActionFromTo
Sep 2020Sidoti & Co.MaintainsBuy
May 2020BenchmarkInitiates Coverage OnBuy
Feb 2020Sidoti & Co.UpgradesNeutralBuy

View More Analyst Ratings for MLHR
View the Latest Analyst Ratings

 

Related Articles (MLHR)

View Comments and Join the Discussion!

Posted-In: Budd Bugatch Furniture Raymond James taxesAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com