KeyBanc Cuts HB Fuller Estimates On Weaker Demand, Uncertainty In China And Europe

HB Fuller Co FUL continues to face headwinds in Europe and China as well as in the auto and construction markets, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Michael Sison maintained a Sector Weight rating on HB Fuller.

The Thesis

HB Fuller’s organic growth is expected to moderate going ahead, as the impact its 2018 pricing actions lessens and the company faces uncertainty in the macro environment in China and Europe as well as softer-than-expected demand in the auto and construction related markets, Sison said in the note.

The company’s second-quarter results reflected double-digit organic growth in Engineering Adhesives, while volumes at Americas Adhesives declined again.

Construction markets could improve modestly, with weather conditions becoming more favorable, Sison mentioned. He added that volumes in developed Europe declined in the quarter and the region could continue to present a challenging low growth backdrop.

While HB Fuller is benefiting from positive trends in Indonesia and Vietnam, “any recovery in China is likely to take more time,” the analyst wrote. He reduced the EPS estimates for FY2019 and FY2020 from $3.20 to $3.15 and from $3.90 to $3.80, respectively.

Price Action

Shares of HB Fuller traded around $45.75 at time of publication Friday afternoon.