Analyst Stifel Bullish on Armstrong

New York, NY, May 3, 2011 -- Flooring industry analyst Stifel Nicolaus is maintaining a "buy" rating on the stock of Armstrong World Industries, citing the company's recent strong earnings report.

Stifel said it is increasing its target stock price to $55 from $49. The stock was trading just under $47 this morning.

Armstrong reported net income of $13.5 million compared with a loss of $19.4 million in the same period a year ago.

"The earnings growth in the quarter was quite impressive, in our view, given that input costs presented a $17 million headwind in the quarter," Stifel said.

"These are good results and speak to the cost savings initiatives underway at the company, both on a manufacturing and general expense line. The company estimates raw materials will increase $40-$50 million in 2011 versus year-ago levels a $5 million increase from prior expectations."

Stifel said that cost cutting has allowed higher margins despite lower volume in some product areas.