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Citi downgraded Sherwin-Williams (NYSE:SHW) from Buy to Neutral on Friday, citing concerns about the near-term housing market outlook. The firm also lowered its price target to $385.00 from $405.00. The stock, currently trading at $356.20, carries a P/E ratio of 33.2x, significantly above industry averages according to InvestingPro data.
The downgrade reflects Citi’s assessment that elevated mortgage rates and delayed Federal Reserve interest rate cuts provide few indicators of a significant housing market recovery in the second half of 2025.
Citi acknowledged that Sherwin-Williams’ long-term market share growth story remains intact, referencing management meeting takeaways from February. Despite this positive long-term outlook, the firm does not see favorable risk/reward potential in the near term.
The research note pointed to "suppressed housing dynamics" and suggested investors wait for a better entry point before purchasing Sherwin-Williams shares.
Citi indicated a preference for RPM International (NYSE:RPM) in the near term, citing its greater exposure to non-residential construction and infrastructure trends compared to Sherwin-Williams’ higher dependence on housing market conditions.
In other recent news, Sherwin-Williams reported its first-quarter 2025 earnings, with earnings per share (EPS) of $2.25, slightly surpassing the forecasted $2.20. However, the company’s revenue of $5.31 billion fell short of the expected $5.42 billion. Despite this revenue shortfall, Sherwin-Williams reaffirmed its full-year sales and EPS guidance, indicating confidence in its strategic initiatives and market position. The company also announced the acquisition of BASF’s architectural business in Brazil, expected to close in the second half of the year, which is anticipated to enhance its market presence in Latin America. Furthermore, BofA Securities raised its price target for Sherwin-Williams to $289 while maintaining an Underperform rating, citing potential downside risks in the company’s end markets. Meanwhile, Evercore ISI increased Walmart (NYSE:WMT)’s stock price target to $107, maintaining an Outperform rating, highlighting Walmart’s focus on market share gains and margin expansion. These developments reflect ongoing strategic moves and market assessments by Sherwin-Williams and Walmart, providing investors with insights into their current and future business trajectories.
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