Valspar Corp. (VAL) Provides Weak FY16 Guidance due to Potential FX Headwinds; Piper Jaffray Reiterates Neutral
Piper Jaffray reiterated a Neutral rating on Valspar (NYSE: VAL), and raised the price target to $92.00 (from $80.00), following the company's 4Q earnings report. Valspar posted very strong EBIT margins in the quarter, anchored predominantly in efficiency, which management expects to continue improving through FY16. Management's EPS guidance for FY16 (of $4.80-$5.00, with $0.20 in unfavorable currency) was below consensus, mainly on FX presenting a more serious headwind to growth than previously anticipated.
Analyst Mike Ritzenthaler commented, "We maintain our Neutral rating and raise our price target to $92 (from $80) on shares of VAL following F4Q results that were in-line with our model. Management's EPS guidance for FY16 (of $4.80-$5.00, with $0.20 in unfavorable currency) was below both our model and consensus, mainly on FX presenting a more serious headwind to growth than previously anticipated. Continued strong performance in Coatings (the packaging business in particular has posted robust growth) has come on the back of share gains, which management stated on the call will likely be able to continue for several more years. The Paint business has a slate of interesting potential catalysts in FY16, which should be more visible once the company laps the lost product at Lowe's starting in F2Q."
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Shares of Valspar closed at $85.37 yesterday.