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On Monday, Canaccord Genuity adjusted its outlook on Newell Rubbermaid shares (NASDAQ:NWL), reducing the price target to $14 from the previous $15, while reaffirming a Buy rating on the stock. The stock currently trades at $13.06, having shown resilience with a positive YTD return of ~6%. The decision follows Newell Brands’ fourth-quarter earnings report released before the market opened on Friday, which met or slightly exceeded consensus expectations on key financial measures. The company’s full-year guidance was largely anticipated, though slightly lower than expected due to the unanticipated impact of a strengthening U.S. dollar on reported sales growth.
The first quarter guidance, however, fell short of expectations, triggering a significant 26% drop in Newell Rubbermaid’s share price, a stark contrast to the Russell 2000’s 1% decline. Despite this setback, InvestingPro data shows the stock has demonstrated strong recovery potential, posting a positive 6-month return of over 9% and an impressive 1-year return of 15.5%. Analysts at Canaccord Genuity believe the sell-off was an overreaction, attributing the market’s response to several factors: the use of the term ’preliminary’ in the company’s guidance, which may have caused uncertainty about tariff impacts; weaker than expected Q1 guidance; a historical pattern of disappointing investors since the unsuccessful Jarden acquisition; and a perception that the company is at risk due to tariffs, which analysts contest given Newell’s lower China sourcing exposure and significant domestic manufacturing presence.
In their commentary, Canaccord analysts highlighted that Newell’s current China sourcing exposure is at 15%, a figure that diminishes when excluding its Baby business, which was previously exempt from tariffs. They noted that Newell Rubbermaid has a considerable advantage over peers in this area due to its substantial domestic manufacturing capabilities, which exceed 50%.
Despite the reduction in estimates and the price target, Canaccord Genuity maintains a positive stance on Newell Rubbermaid stock. The firm encourages investors to view the recent price drop as an opportunity to buy or increase their holdings. For a deeper understanding of NWL’s investment potential, InvestingPro offers a comprehensive Pro Research Report with detailed analysis of the company’s fundamentals, valuation metrics, and growth prospects, available as part of its coverage of over 1,400 US stocks. The analysts concluded their remarks by emphasizing their long-term experience in covering consumer stocks and expressing their view that the market’s reaction to Newell Brands’ guidance was one of the most excessive they have witnessed.
In other recent news, Newell Rubbermaid reported lower-than-expected core sales for the fourth quarter of 2024, though it managed to surpass earnings per share estimates. The company’s preliminary 2025 guidance, which does not account for potential effects of new tariffs on China, has raised questions among investors. Citi analysts have subsequently reduced their price target for the company to $7.75, maintaining a neutral rating.
Meanwhile, Canaccord Genuity has raised its price target for Newell Rubbermaid to $15, maintaining a buy rating. The firm sees potential for a company turnaround under the leadership of CEO Chris Peterson, who has focused on the company’s most profitable brands and disciplined innovation.
In other developments, Newell Brands has secured $1.25 billion through a notes offering. The proceeds will be used to redeem its 4.875% senior notes due in 2025 entirely and partially redeem its 4.200% senior notes due in 2026. These recent developments reflect the company’s ongoing efforts to manage its debt profile and strategically address upcoming debt maturities.
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