Gold prices steady ahead of Fed decision; weekly weakness noted
On Wednesday, BofA Securities adjusted its price target for Sherwin-Williams (NYSE:SHW) stock, increasing it slightly from $283.00 to $289.00. Despite the uptick in the price target, the firm kept its Underperform rating on the company’s shares. According to InvestingPro data, the company, currently valued at $87 billion, trades at a P/E ratio of 32.9x, suggesting a premium valuation compared to its peers. BofA Securities analyst Steve Byrne provided insights into the decision, noting that the market had reacted positively to Sherwin-Williams’ unchanged guidance for mid-single-digit earnings per share (EPS) growth in 2025. Shares of Sherwin-Williams had seen a 5% increase on Tuesday. InvestingPro analysis reveals that 12 analysts have recently revised their earnings estimates downward for the upcoming period, despite the company maintaining a strong financial health score.
Byrne explained that the maintenance of the 2025 guidance should be viewed as a customary practice rather than a strong indication of confidence in the company’s end markets. BofA Securities remains cautious, anticipating further potential downside risks across the company’s end markets, which are already facing challenges.
The analysis highlighted several factors contributing to this cautious outlook. In the residential market, home turnover in the United States, which is a critical driver of residential repaint demand, is at low levels. This is attributed to the significant spread between new and existing homeowner mortgage rates. In addition, the risk of deportation could lead to labor shortages, as indicated in BofA’s paint contractor survey. This may slow down residential repaint and new residential construction activities.
Moreover, the recent contraction in homeowner wealth could result in decreased demand for do-it-yourself (DIY) and residential repaint products. On the commercial front, fears of economic slowdowns might cause delays in construction and maintenance, which would affect paint demand.
Lastly, while Sherwin-Williams has previously been successful in capturing market share in the Protective & Marine (PSG) segment, there is a possibility that competitors like Pittsburgh Paints might take measures to retain their market share, as per Byrne’s commentary.
In other recent news, Sherwin-Williams reported its first-quarter 2025 earnings, revealing earnings per share (EPS) of $2.25, which exceeded the forecasted $2.20. However, the company faced a revenue shortfall, bringing in $5.31 billion compared to the expected $5.42 billion. Despite this, the company reaffirmed its full-year sales and EPS guidance, indicating confidence in its strategic direction. Sherwin-Williams is actively pursuing market expansion, demonstrated by its acquisition of BASF’s architectural business in Brazil. The company is also planning to close the acquisition of Souvenil in the second half of the year, enhancing its presence in Latin America. Recent analyst discussions highlighted Sherwin-Williams’ strong performance in the Protective and Marine segments and emphasized the company’s strategic focus on cost control and operational efficiency. Analyst firms, including BMO and Wells Fargo (NYSE:WFC), noted the company’s proactive pricing strategies in response to cost pressures and tariffs. Sherwin-Williams continues to focus on expanding its competitive position while navigating challenges in the residential repaint market and commercial construction spending.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.