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Investing.com - Evercore ISI has reduced its price target on Sherwin-Williams (NYSE:SHW) to $380.00 from $400.00 while maintaining an Outperform rating on the stock. With a current market capitalization of $85 billion and trading at $340.07, InvestingPro analysis suggests the stock is currently overvalued, though analyst targets range from $258 to $420.
The firm cited choppy market conditions and elusive volume growth as key factors behind the adjustment, noting that the paint manufacturer missed earnings expectations despite targeted growth initiatives in its Paint Store Group. Evercore ISI emphasized that volume growth remains necessary for earnings expansion. The company maintains strong fundamentals with a 48.72% gross profit margin and has demonstrated commitment to shareholder returns, having maintained dividend payments for 47 consecutive years.
Sherwin-Williams reported weaker-than-expected second-quarter results, with sales within guidance range but lower margins driving a $0.40 earnings miss. The company’s Paint Store Group showed growth that offset softness in other segments, though gross margin improvements fell short of expectations.
Despite challenging conditions, Evercore ISI highlighted that Sherwin-Williams continues to gain market share in a difficult housing market, though these gains cannot fully offset macroeconomic headwinds. This situation prompted the company to cut the midpoint of its previous guidance by $0.50. InvestingPro subscribers can access 12 additional key insights about Sherwin-Williams, including detailed analysis of its market position and growth prospects in the comprehensive Pro Research Report.
The research firm projects consolidated sales growth of 0.5% for Sherwin-Williams in 2025, primarily driven by price/mix factors, with volume expected to stabilize at slightly negative levels in the second half of the year. Gross margins are forecast to expand by 80 basis points in the second half and for the full year.
In other recent news, Sherwin-Williams reported its second-quarter earnings for 2025, which showed a miss in earnings per share (EPS) expectations but a slight beat in revenue forecasts. The company posted an EPS of $3.38, falling short of the anticipated $3.80, reflecting an 11.05% negative surprise. However, revenue reached $6.31 billion, slightly above the expected $6.30 billion. In related developments, Citi has adjusted its price target for Sherwin-Williams to $375 from $385, maintaining a Neutral rating on the stock. The firm described the current market as a "critical inflection point" for North American architectural coatings. Sherwin-Williams is actively investing in customer-facing growth initiatives within its Paint Stores Group, while some competitors are scaling back their customer-facing assets. These recent developments highlight the challenges and strategic moves facing Sherwin-Williams in the current market environment.
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