RPM - RPM International upgraded to Buy at Deutsche Bank

2023-07-27 13:06:13 ET

RPM International on Wednesday was upgraded to Buy from a previous investment rating of Hold by analysts at Deutsche Bank. They said the maker of paint brands such as Rust-Oleum and Zinsser is poised for gains with a rebound in construction as companies move factories back to the United States.

“We have been too cautious on the construction downturn and under-appreciating the strength of infrastructure and re-shoring demand which is driving a recovery in construction products volumes in roofing and water-proofing,” David Huang, analyst at Deutsche Bank, said in a July 26 report. “Meanwhile, residential construction market is also stabilizing with early signs of improvement.”

RPM’s ( NYSE: RPM ) stock rose as much as 9.7% Wednesday after the company beat earnings estimates for fiscal Q4 ended May 31.

Deutsche Bank raised its price target on RPM ( RPM ) to $118 a share from $90 a share previously, based on a multiple of 14.8 times estimated EBITDA for calendar-year 2024. The bank lifted its EPS estimate to $4.96 from $4.38 for 2024.

RPM’s ( RPM ) margin achievement plan (MAP) for 2025 is a reason for optimism, the report said.

“RPM ( RPM ) will maintain this valuation premium as it demonstrates its earnings resilience in a construction led downturn, its pricing stickiness in a deflation cycle, and delivers on its MAP 2025 program,” according to Deutsche Bank.

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