Sherwin-Williams stock outlook cautious on housing, UBS maintains Buy

Investing.com - Sherwin-Williams (NYSE:SHW), currently trading at $363.86 and showing a 7.74% YTD return, received a reiterated Buy rating and $395.00 price target from UBS, despite the paint manufacturer’s cautious outlook on the U.S. housing market. According to InvestingPro analysis, the stock appears overvalued at current levels.

UBS analyst Joshua Spector maintained his positive stance on the stock following a sell-side dinner with Sherwin-Williams’ management team, including the CEO and CFO, which replaced the company’s investor day this year.

During the event, Sherwin-Williams executives expressed a "weaker for longer" view of the U.S. architectural market extending into 2026, linking potential improvement to lower interest rates or house prices that would enhance affordability.

Despite these market challenges, the company emphasized it continues to invest through the downturn and expects its Paint Stores Group to grow at approximately 1.5-2.0 times the market rate, focusing on "growing the moat during challenging times."

UBS projects that even with declining base volumes in the first half of 2026 followed by modest growth in the second half, Sherwin-Williams could still achieve approximately 10% EPS growth in 2026, with potential for 15-20% annual EPS growth once a recovery takes hold.

In other recent news, Sherwin-Williams has faced a series of analyst adjustments following its latest financial results. Mizuho (NYSE:MFG) lowered its price target for the company to $385, maintaining an Outperform rating, due to weaker-than-expected quarterly results and reduced full-year guidance. The company reported second-quarter adjusted earnings per share of $3.38, which fell short of both Mizuho’s estimate of $3.85 and the consensus forecast of $3.81. Similarly, Evercore ISI reduced its price target to $380, citing challenges in market conditions and volume growth, while also retaining an Outperform rating.

BMO Capital also adjusted its outlook, lowering the price target to $391 from $405, following what it described as a "notable EPS miss" and a guidance cut, but still maintained a positive long-term view. KeyBanc maintained a Sector Weight rating, noting softer demand in U.S. construction and industrial markets, and adjusted its 2025 earnings per share estimate down by 4%. RBC Capital, however, reiterated an Outperform rating with a $400 price target after discussions with company executives. These recent developments reflect a mixed outlook for Sherwin-Williams, with varying analyst perspectives on the company’s future performance.

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