Shares of adhesives manufacturing firm H.B. Fuller Co. (FUL) jumped 2.7% in extended trade on Wednesday after the company reported better-than-expected revenues for the fiscal third quarter ended August 28.
Minnesota-based H.B. Fuller is engaged in the formulation, production and sale of adhesives, sealants and other specialty chemical products.
Net revenue increased 20% year-over-year to $827 million, beating the Street’s estimate of $797.48 million. Adjusted earnings per share (EPS) rose 4% year-over-year to $0.79 and came in line with analysts’ expectations.
The President and CEO of H.B. Fuller, Jim Owens, said, “H.B. Fuller delivered another strong quarter with double-digit organic revenue growth as we gained share in key market segments through innovative solutions, improved pricing and took decisive actions to secure raw materials and meet customer demand.”
The company ended the quarter with cash and equivalents of $68 million and total debt of $1.66 billion. (See H.B. Fuller stock chart on TipRanks)
Notably, H.B. Fuller has raised the revenue guidance for Fiscal Year 2021 and now expects revenue to grow by 17% to 18% year-over-year. Adjusted EBITDA is likely to range from $460 million to $470 million. Moreover, for the fiscal fourth quarter, the company projects revenue growth of 15% to 17% compared to the year-ago quarter.
“We have implemented $225 million of annualized pricing adjustments this year and recently announced additional price increases and a surcharge on global shipments effective September 1, 2021. We anticipate a significant improvement in margins in the fourth quarter as a result of these actions,” Owens added.
Two months ago, Robert W. Baird analyst Ghansham Panjabi reiterated a Buy rating on the stock with a price target of $72 (19.2% upside potential). The analyst had expected the company to report earnings per share (EPS) of $0.93 in the third quarter.
Overall, the stock has a Moderate consensus rating based on 2 Buys and 2 Holds. The average H.B. Fuller price target of $73.25 implies 21.2% upside potential. Shares have gained 31% over the past year.
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