Sherwin-Williams stock downgraded by Citi amid housing market concerns

Investing.com - Sherwin-Williams (NYSE:SHW) has been downgraded by Citi amid concerns about the U.S. housing market recovery and potential impacts from new tariffs. The paint manufacturer, currently trading at $345.93 with a P/E ratio of 32.44x, appears overvalued according to InvestingPro analysis, despite its strong market position and $23.04 billion market capitalization.

Citi analysts expressed doubt about a material recovery in the U.S. housing market during the second half of 2025, citing elevated mortgage rates as a key factor affecting Sherwin-Williams’ business outlook.

The bank noted that even with an expected interest rate cut in the second half of the year, "it remains to be seen how quickly this could translate to improved volumes for SHW."

Citi’s analysis also addressed broader tariff concerns following the U.S. announcement of 25% tariffs on South Korea and Japan last week, along with new 50% tariffs on Brazil, which could impact various chemical companies.

The bank identified several companies that could be more negatively affected by the tariffs due to their exposure to the automotive and electronics sectors, including Eastman Chemical (NYSE:EMN), Celanese (NYSE:CE), Huntsman (NYSE:HUN), Axalta Coating Systems (NYSE:AXTA), and PPG (WA:IBSP) Industries (NYSE:PPG).

In other recent news, Sherwin-Williams reported its first-quarter 2025 earnings, exceeding expectations with earnings per share (EPS) of $2.25 against a forecast of $2.20. However, the company’s revenue of $5.31 billion fell short of the anticipated $5.42 billion. Despite this revenue shortfall, Sherwin-Williams reaffirmed its full-year sales and EPS guidance, indicating confidence in its strategic initiatives. Meanwhile, Citi downgraded Sherwin-Williams from Buy to Neutral due to concerns about the housing market, citing high mortgage rates and a lack of Federal Reserve interest rate cuts as factors affecting a potential market recovery. In contrast, BofA Securities raised its price target for Sherwin-Williams to $289, though it maintained an Underperform rating, reflecting caution about the company’s end markets. The home improvement sector, which includes Sherwin-Williams, is experiencing soft trends, with consumer confidence being a significant concern, as noted in a KeyBanc survey. Additionally, Evercore ISI raised its price target for Walmart (NYSE:WMT) to $107, highlighting the company’s focus on market share and margin expansion. These developments provide investors with a snapshot of the current landscape for Sherwin-Williams and related sectors.

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