BMO Capital analyst John McNulty reiterated a Buy rating on RPM International (RPM – Research Report) yesterday and set a price target of $125.00.
John McNulty’s Buy rating for RPM International is based on several key factors indicating strong growth potential for the company. He points to the continued double-digit EBIT growth despite a challenging macroeconomic environment and a sluggish housing market, as evidenced in recent quarterly results and the outlook for the second half of the fiscal year 2024. McNulty highlights the successful implementation of RPM’s self-help/MAP25 program, which, coupled with a recovering price/raw materials dynamic, is propelling earnings per share growth and is poised to produce even more robust results upon the rebound of US existing home sales. This positive outlook, despite a slight target price reduction due to modestly lower consumer segment forecasts, supports the reiteration of an Outperform rating.
Additionally, McNulty considers the temporary weakness in the Consumer/Specialty segments, which are linked to residential housing, to be a short-term issue. He anticipates a recovery in these areas in the latter half of the year, as falling mortgage rates are expected to stimulate existing home sales. Furthermore, RPM’s growth is not solely dependent on the housing market; the Construction and Performance segments are showing solid performance, driven by significant infrastructure and reshoring spending. These segments are benefiting from ongoing stimulus and infrastructure bill-related projects and are expected to continue growing robustly through the fiscal year 2025, setting RPM apart from competitors and contributing to McNulty’s positive rating.
McNulty covers the Basic Materials sector, focusing on stocks such as Chemours Company, Air Products and Chemicals, and Celanese. According to TipRanks, McNulty has an average return of 3.2% and a 55.00% success rate on recommended stocks.
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RPM International (RPM) Company Description:
RPM International, Inc. engages in the manufacture, marketing, and sale of coatings, sealants, building materials, and related services. It operates through the following business segments: Industrial, Consumer, and Specialty. The Industrial segment is the maintenance and protection products for roofing and waterproofing systems, flooring, passive fire protection, corrosion control, high-performance sealing and bonding solutions, infrastructure rehabilitation and repair, and other construction chemicals. The Consumer segment is comprised of rust-preventative, special purpose and decorative paints, caulks, sealants, primers, nail enamels, cement and wood care coatings, and other branded consumer products. The Specialty segment includes industrial cleansers, restoration services equipment, colorants, exterior finishes, edible coatings, and other specialty original equipment manufacturer coatings. The company was founded by Frank C. Sullivan in May 1947 and is headquartered in Medina, OH.
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