DA Davidson Starts Fortune Brands (FO) at Neutral; If FO is Undervalued, it Will Be Realized by a Premium on Spin-Co

DA Davidson initiates coverage on Fortune Brands (NYSE: FO) with a Neutral. PT $66.

DA analyst said, "We like the spirits story but until we get more clarity on the valuation of the Home & Security spin-off, we are remaining on the sidelines. Ironically, the best analyst to make a call on Fortune today would be one that had great insight into the Home & Security Business since it will need to trade at a premium valuation on depressed earnings to make the spin-off successful."

"We are initiating a 2011 EPS estimate of $3.20, up 14% from the $2.81 posted in 2010, which was up 16% from 2009. Home & Security may be the star this year as the critical home improvement market (75% of segment sales) recovers."

For more ratings news on Fortune Brands click here and for the rating history of Fortune Brands click here.

Shares of Fortune Brands closed at $62.70 yesterday.

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