Eagle Materials rises after analyst upgrade

Gypsum wallboard maker Eagle Materials rises after analyst upgrades stock

• On 3:15 pm EDT, Tuesday September 8, 2009

NEW YORK (AP) -- Shares of Eagle Materials Inc. rose Tuesday on prospects that U.S. residential construction will increase later this year, boosting demand for the company's building materials.

JP Morgan analyst Mike Betts raised his rating on shares of the wallboard and cement maker to "neutral" from "underweight" and reiterated his $28 price target, which implies a 14 percent share price gain.

He said Dallas-based Eagle's low costs helps its profit margin on wallboard to be the highest in the U.S. wallboard industry.

In addition, the company's wallboard business, which is about 11 percent of the nation's wallboard market, should experience stronger revenues soon.

"If, as we expect, the U.S. housing market begins to recover later this year, demand for wallboard should increase, facilitating further price increases," he wrote in a client note.

The analyst, who said Eagle Materials has a "comparatively strong balance sheet," also increased his estimate of adjusted earnings-per-share for fiscal 2010 by 2 cents to 97 cents.

Analysts polled by Thomson Reuters expect, on average, 89 cents.

In afternoon trading, the stock rose $1.30, or 5.3 percent, to $25.75.