Newell Brands, the renowned manufacturer behind popular brands such as Rubbermaid and Sharpie, is poised for a turnaround according to bullish analysts.
Canaccord Genuity recently initiated coverage of Newell (ticker: NWL) with a strong Buy recommendation and set a price target of $13 in their highly anticipated report. This promising development gave a significant boost to Newell’s stock, which surged 9.1% to $9.70, securing its place among the top performers in the S&P 500.
While the company faced its fair share of challenges in recent years, including a complex merger with Jarden Corporation that resulted in the formation of Newell Brands, it has since divested itself of certain business segments gained through the acquisition.
However, the first half of 2023 has proven to be arduous for Newell Brands. Retailers have been destocking their shelves, and consumers have become more cautious in their discretionary spending, leading to a downward trend for the company. The stock has already experienced a loss of over 25% this year. In an effort to streamline costs, Newell announced a reduction of 13% in its office staff earlier this year. Furthermore, its first-quarter results revealed a wider-than-expected loss and a decline in net sales compared to the previous year.
Nevertheless, the analysts at Canaccord Genuity believe that Newell Brands has a brighter future ahead. With new management at the helm and a strategic focus on revitalizing growth and profitability, the company is poised to regain its former strength in the market.
Newell Focuses on Profitable Brands, Targets Younger Consumers
Newell, the consumer goods company, announced the appointment of Chris Peterson as the new president and CEO, succeeding Ravi Saligram, who recently retired. In line with this move, the company revealed its updated strategy, which involves prioritizing its largest and most profitable brands. Out of the 80 brands owned by Newell, 25 contribute to a staggering 90% of the company’s sales and profit, as highlighted by analysts.
Recognizing the changing consumer landscape, Newell aims to capture the attention of Millennials and Gen Z, who tend to spend more on the company’s product categories when compared to Gen X and baby boomers. Consequently, their advertising efforts will primarily target younger consumers, with the potential to also impact adjacent age groups.
Industry experts believe that this focused approach is precisely what Newell needs to propel its success. By concentrating on sales-driven profitability and divesting from underperforming ventures, the company can streamline its operations for maximum efficiency.
Investors eagerly await Newell’s second-quarter earnings report, scheduled to be released on July 28 before the market opens. Analyst opinions on the stock remain divided according to FactSet, with 38% advocating a Buy rating, 54% opting for Neutral, while 8% suggest Sell.