Fed’s Powell opens door to potential rate cuts at Jackson Hole
Investing.com -- Wolfe Research raised its rating on Stanley Black & Decker to Peer Perform from Underperform, saying the toolmaker’s risk of fresh earnings downgrades has “comfortably” receded after two years of pressure.
Chief operating officer Chris Nelson will take over as chief executive, providing “strategic continuity” that could sharpen commercial execution and product innovation.
While the management remains on track for low‑ to mid‑single‑digit revenue growth in 2025, and now expects tariff‑related price‑cost headwinds of about 40 cents per share, roughly half the prior estimate.
“For the first time in ~2 years, we no longer see outsized risk of negative EPS revisions,” Wolfe wrote, adding it sees a path to exceed the company’s roughly $4.50 per‑share guidance for this year.
While skeptical that Stanley can reach its 35% gross‑margin ambition soon, Wolfe said any progress toward that goal supports talk of $8–$9 in medium‑term earnings power, versus its own $6.10 forecast for 2027.
Net debt should fall below three times EBITDA within 18 months, a target that could arrive sooner if the company sells non‑core assets.
Rolling its valuation models to year‑end 2026, Wolfe raised its fair‑value range to $53–$112 a share, compared with Monday’s $69 close, and said the risk‑reward now tilts positive even though downside remains in a bear‑case scenario of flat earnings through 2027.
Key risks flagged include a potential consumer recession, steeper tariffs that erode margins, and renewed doubts over the dividend’s sustainability.