H.B. Fuller shares jump after company beats Street

SIOUX FALLS, S.D. - Shares of H.B. Fuller Co. jumped Wednesday, a day after the adhesive, sealant and paint maker's second-quarter profit soundly beat analysts' estimates.

H.B. Fuller shares gained $1.53, or 9.2 percent, to $18.23 in morning trading.

After market close on Tuesday, the company reported a profit of $17.6 million, or 36 cents per share, besting Wall Street's target of 25 cents per share, according to a poll by Thomson Reuters. Revenue slid more than 16 percent to $299.2 million.

KeyBanc Capital Markets analyst Michael J. Sison said he was encouraged by the results and improvement in gross margins, as the company benefited from lower raw material costs and good pricing discipline in a challenging demand environment.

With weak demand likely persisting for the remainder of the year, volume growth is necessary to get earnings back on track for the long term," Sison said.

"While we suspect the stock will be strong on the earnings beat, we would need to get more comfortable that the new level of profitability is sustainable," he wrote in an analyst note.

Deutsche Bank Securities analyst Jason Miner said that tentative demand recovery is likely in the second half of 2009, but pressure on prices will remain a key challenge in the near term.

Both KeyBanc and Deutsche Bank maintained "Hold" ratings on the stock.

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