Bullish indicating open at $55-$60, IPO prices at $37
Monday - UBS has adjusted its outlook on Newell Rubbermaid (NASDAQ:NWL) shares, with analyst Peter Grom reducing the price target to $8.00 from the previous $10.50, while keeping a Neutral stance on the stock. Currently trading at $13,063.71, the stock has shown resilience with a 15.5% return over the past year, according to InvestingPro data. The revision follows the company’s fourth-quarter earnings, which surpassed expectations due to strong gross margins and favorable items below the line, despite core sales and operating profit margin (OPM) coming in weaker than anticipated.
Newell Rubbermaid provided initial fiscal year 2025 guidance, which, according to management, should be seen as preliminary due to the uncertainties surrounding tariffs and macroeconomic factors. The guidance suggests that expectations prior to the announcement were at the higher end of the ranges, with potential for OPM expansion to be somewhat stronger than previously thought. Despite this, the market reaction was negative, with Newell Rubbermaid’s stock experiencing a significant drop last Friday, closing 26% lower compared to a 0.2% dip in the XLP index. The stock has traded between $11,116.46 and $13,188.41 over the past 52 weeks, with a notable 9.34% gain over the last six months.
The sharp decline in share price was unexpected and led to confusion among investors, as per Grom’s discussions. Several factors, such as the company’s positioning, a second-half-weighted guide, and the preliminary nature of the outlook, may have contributed to the sell-off. However, the analyst noted that the underlying earnings report did not fundamentally alter the investment thesis for those bullish on the stock. The anticipated margin growth towards the end of the year could indicate that a margin recovery story is unfolding for Newell Rubbermaid over the next one to two years.
Despite the potential for margin expansion, UBS suggests caution due to the challenging and changing operating environment, as well as evolving tariff situations. For deeper insights into Newell Rubbermaid’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks. Newell Rubbermaid’s stock is currently trading at approximately a 30% discount compared to its small-to-mid-cap household and personal care (HPC) peers, which is consistent with its three-year historical average. Grom advises investors to look for a more attractive entry point or clearer evidence that the expected second-half turnaround is achievable before adopting a more positive view on the company’s shares. Consequently, UBS has lowered its 12-month price target to reflect these considerations.
In other recent news, Newell Rubbermaid has experienced a series of adjustments in its stock price targets. Canaccord Genuity reduced its price target to $14 from $15, maintaining a Buy rating, following Newell’s fourth-quarter earnings report. The firm believes the 26% drop in Newell Rubbermaid’s share price was an overreaction and sees the company’s substantial domestic manufacturing capabilities as a significant advantage. In contrast, Citi analysts reduced their price target to $7.75 from $10.50, keeping a Neutral rating due to lower-than-expected core sales for the fourth quarter of 2024.
On a different note, Canaccord Genuity later raised the price target to $15, maintaining its Buy rating, expressing optimism about Newell Rubbermaid’s turnaround under CEO Chris Peterson’s leadership. The firm anticipates modest top-line growth starting in 2025.
In another recent development, Newell Brands secured $1.25 billion through a notes offering, as part of its financial strategy to manage its debt profile. The company intends to use the proceeds to redeem its senior notes due in 2025 and 2026. These are the latest developments concerning Newell Rubbermaid.
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