Five things to watch in markets in the week ahead
On Friday, Canaccord Genuity analyst Brian McNamara upgraded Spectrum Brands, trading on the New York Stock Exchange under the ticker (NYSE:SPB), from Hold to Buy. Accompanying the upgrade, McNamara increased the price target from $94.00 to $102.00. Currently trading at $76.46, the stock appears undervalued according to InvestingPro analysis. The revision followed Spectrum Brands’ first-quarter 2025 performance, which, according to McNamara, had mixed results but showcased significant earnings beats and reaffirmed guidance.
Spectrum Brands’ sales were generally in line with expectations, with a notable overperformance in the Home & Garden (H&G) sector and a miss in the Global Pet Care (GPC) division. The company’s adjusted earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) surpassed consensus estimates by 11% and 16%, respectively. Despite the stock’s recent underperformance, declining 20% compared to the Russell 2000’s 3% fall over the past two months, McNamara did not see this as indicative of a disaster.
McNamara reflected on the previous downgrade of Spectrum Brands stock nearly a year ago, which was predicated on the need for the company to demonstrate consistent top-line growth to justify a higher valuation multiple. Since then, organic sales have risen by an average of 3%, with current revenue growth at 2.56% and gross profit margins at 37.76%. McNamara deemed this satisfactory given the company’s 7x consensus 2025 estimated enterprise value to EBITDA (EV/EBITDA) multiple. Furthermore, Canaccord’s 2025 adjusted EBITDA and EPS estimates for Spectrum Brands have increased by 15% and 44%, respectively, the latter bolstered by significant share buyback activity.
The analyst acknowledged that Spectrum Brands’ Home & Personal Care (HPC) business could be the most affected by the new tariffs. However, he suggested that delaying the HPC segment’s separation or sale might not be negative. McNamara pointed to SharkNinja’s innovation raising the industry bar and peers like Newell Brands and Spectrum Brands following suit. He proposed that such developments could lead to a less commoditized market, potentially warranting higher valuation multiples in the future.
In other recent news, Spectrum Brands Holdings Inc . has been the subject of several analyst adjustments and has reported key financial results. Oppenheimer recently lowered their price target for Spectrum Brands from $115 to $105, while maintaining an Outperform rating. This adjustment followed the company’s first quarter fiscal year 2025 earnings report, which revealed an EBITDA of $78 million, surpassing estimates, and revenue of $700 million. However, the company’s Global Pet Care segment reported a 6% decline year-over-year.
RBC Capital Markets maintained its Outperform rating on Spectrum Brands, with a steady price target of $114. The firm’s analysis indicates expectations for the company’s first fiscal quarter to align with projections, anticipating modest growth across all segments. Meanwhile, Canaccord Genuity increased its price target from $91 to $94, maintaining a Hold rating, following Spectrum Brands’ recent earnings report which presented a mixed outcome for the fourth quarter.
On the earnings call, Spectrum Brands reported a robust fiscal 2024 with a 20% increase in adjusted EBITDA, despite substantial investments in research and development and marketing. The company also announced a 12% dividend increase and projected low single-digit net sales growth for fiscal 2025 across all business units. Despite facing challenges such as geopolitical unrest and macroeconomic uncertainty, the company remains cautiously optimistic about its operational strength and market position. These are the recent developments for Spectrum Brands.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.