Oscar Gruss Starts Fortune Brands (FO) at Hold, Sets Price Targets for (BEAM) and (FHBS)

Oscar Gruss initiates coverage on shares of Fortune Brands (NYSE: FO) with a Hold rating and $57 price target.

The company announced that it will be spinning off its Home and Security Business as a separate company, this will take place on October 4th. The firm values the company's liquor business at $45 per share and the home and security business at $12 per share.

The firm believes that investors will sell shares of FHBS and retain shares of BEAM following the distribution.

For BEAM, the firm estimates 2012 EPS of $2.26 with $2.92 billion in revenue and $720 million in EBITDA. The company will also continue to pay out a its $0.19 dividend.

For 2012, Oscar Gruss estimates EPS and revenue of $0.88 and $3.59 billion for FBHS. The firm notes that theses estimates are on an aggressive basis.

An analyst at Oscar Gruss comments, "BEAM’s valuation multiples reflect its mid-20s EBITDA margin, low-capital and low-headcount operating model, and the steady unit, revenue and acquisition pattern of the business. Near-term stock price catalysts are continued investor activism and financial performance that exceeds expectations. FHBS’s multiples reflect both its capital and employee intensive operations as well as the cyclical nature of its industry. Longer term price catalysts include an improvement in the economy and the housing market in particular."

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 $58.11 yesterday.

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