H.B. Fuller Company (FUL) has received a new Hold rating, initiated by UBS analyst, Lucas Beaumont.
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Lucas Beaumont’s rating is based on several factors that highlight both the challenges and opportunities facing H.B. Fuller Company. The company is experiencing near-term organic growth challenges, with sales growth expected to be less than 1% annually through 2027. This limited growth translates to a modest EBITDA growth of approximately 3% per year, which falls short of consensus estimates. Additionally, the company’s pricing power has historically been limited, with less than 1% annual price increases from 2010 to 2025, excluding periods of high raw material inflation.
Despite these challenges, H.B. Fuller is trading at a 19% discount to its five-year average valuation multiple, which is in line with its U.S. specialty chemical peers. The stock offers a free cash flow yield of 6.7% to 7.1% for 2026 and 2027 estimates, providing some support to its valuation. While there are downside risks related to volume and pricing, these are balanced by the company’s below-average valuation multiple and potential for incremental mergers and acquisitions, which could enhance growth prospects. Therefore, the Hold rating reflects a balanced risk/reward scenario given the current market conditions.