From Standard & Poor's Equity Research
SunTrust Robinson Humphrey upgraded ACCO Brands (ABD) to buy from neutral, noting that the stock price has cheapened over the past year and is down 20% year to date.
Analyst William Chappell says declines were due to a year over year decline in the company's earnings per share (EPS) for the past four quarters, amid factors such as selling pressure from FORTUNE BRANDS shareholders as part of its Aug. 2005 reverse spin-off. He believes the third quarter will be an inflection point for the story with "apples to apples" comparisons, year over year EPS improvement, and the first signs that synergies and price increases are following the bottom line. Chappell sees $1.16 2006 EPS and $1.50 EPS in 2007. He says his 12-month price target of $30 is based on 15.3 times his multiple on his fiscal year 2008 EPS estimate of $1.95.