H.B. Fuller (FUL) is set up to beat Q2 earnings expectations and potentially raise full-year guidance, UBS Securities said, arguing that management set an overly cautious outlook when uncertainty was particularly high following the onset of Middle East disruption earlier this year.

The investment firm lifted its earnings estimates materially above consensus, driven by a better-than-expected raw materials outlook, an improved volume trajectory and pricing realization tracking near the company's targeted range.

The brokerage said in a note on Tuesday that it sees the top end of any raised guidance range as achievable, with further upside possible if pricing outperforms.

A potential acquisition of Advanced Medical Solutions is complicating the setup, with investor sentiment skewing negative on deal concerns over leverage rising to levels that could preclude a private equity takeout, seen as a key near-term value catalyst, according to the note.

UBS has a neutral rating on the company's stock and raised its price target to $71 from $63.

Price: 64.80, Change: +1.08, Percent Change: +1.69