Shares of Georgia Gulf Corp. (GGC:US), the biggest North American maker of vinyl-based construction products, rose 5.4 percent after Citigroup Global Markets raised its rating on the stock to ``buy'' from ``sell.''
Georgia Gulf, based in Atlanta, gained 95 cents to $18.66 in New York Stock Exchange composite trading. The percentage gain was the most in two weeks. The shares still have dropped 3.4 percent this year.
Chief Executive Officer Edward Schmitt acquired Royal Group Technologies in October, increasing sales of products made from polyvinyl chloride, or PVC, used in construction, including pipe and vinyl fencing. Profit from chlorine and PVC probably will rise through the third quarter, Citigroup analyst P.J. Juvekar said in a report.
``Georgia Gulf shares reflect all the bad news related to housing, new PVC supply and the disastrous Royal Group acquisition,'' Juvekar said. `` As earnings forecasts improve, we expect the shares to rise.''
Juvekar was the only analyst among 10 who recommends buying the shares. Six recommend ``hold,'' and three say ``sell.''
Juvekar raised his price target for the stock to $23 from $15, and he boosted his 2007 profit estimate to 72 cents a share from 60 cents. He raised his 2008 profit projection to $1.25 from 73 cents.
The company was forecast to earn 95 cents a share this year and 79 cents in 2008, the average estimate of seven analysts surveyed by Bloomberg.
Risks to Georgia Gulf's long-term profit include excess PVC production and a persistent slump in U.S. home building, Juvekar said.
Georgia Gulf last month reported a fourth-quarter loss of $47.2 million on lower demand from the U.S. housing industry. Slowing home construction will reduce operating rates at North American plants that make vinyl resins to 84 percent of capacity this year from 89 percent in 2006, the company said in its annual report.
Georgia Gulf has not announced when first-quarter results will be issued.
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