On Monday, Canaccord Genuity (TSX:CF) maintained its Buy rating on Newell Rubbermaid (NASDAQ:NWL) stock and increased the price target to $12.00 from the previous $10.00. This adjustment followed Newell Brands' report of strong second-quarter results before the market opened on Friday, which included a significant beat on adjusted EBITDA and earnings per share (EPS).
The company's quarterly performance was highlighted by sales that met market expectations, with its Learning & Development segment notably exceeding forecasts. Additionally, Newell Brands achieved a gross margin that surpassed consensus estimates by 265 basis points. All three business segments of the company reported a beat on core organic sales.
Canaccord Genuity's analysis points to a conservative guidance increase for Newell Brands, suggesting there is potential for further growth. The firm anticipates a return to steady, albeit modest, top-line growth for Newell Brands by 2025 due to the positive impact of internal initiatives.
While Canaccord Genuity has made a slight upward adjustment to its third-quarter sales estimate for Newell Brands, the firm has reduced its top-line estimates for the years 2024 and 2025. This revision is solely attributed to the effects of foreign exchange rates. However, the firm has raised its profitability estimates for the year 2024. The new price target reflects these updated expectations and the continued endorsement of a Buy rating for the stock.
In other recent news, Newell Brands has reported sequential improvements in core sales and gross margin, showing resilience amidst inflationary pressures. The company anticipates a temporary decline in core sales during the second quarter, counterbalanced by an expected improvement in gross margin.
These developments come as Newell Brands ramps up its advertising and promotional efforts to support new product innovations, particularly within its Writing, Baby, and Commercial businesses.
RBC (TSX:RY) Capital Markets has recently raised their price target for Newell Brands to $9.50, up from the previous $7.50, while maintaining a Sector Perform rating. This adjustment reflects a positive response to Newell Brands' reported second-quarter results, which seem to validate the effectiveness of the company's new strategy. RBC Capital's analysis suggests potential for growth within the company's Learning & Development and Home & Commercial Solutions segments in the upcoming quarters.
Despite facing inflation and foreign exchange challenges, Newell Brands is witnessing promising results from its premiumization strategy and improvements in gross margin. The company's focus on reducing costs through supply chain optimization has also contributed to these positive developments.
As part of its 2024 priorities, Newell Brands remains committed to innovation and market excellence, with CEO Chris Peterson expressing confidence in the company's direction and the progress made since the implementation of a new strategy and operating model.
InvestingPro Insights
Recent performance metrics for Newell Brands (NASDAQ:NWL) show a positive trajectory in investor returns over varying time frames. The 1-week price total return stands at a modest 0.17%, while the 1-month and 3-month returns show more substantial gains of 2.16% and 4.05%, respectively. Looking at a longer horizon, the 6-month return has been impressive at 8.73%, and the year-to-date return further solidifies this trend at 10.72%. Over the past year, Newell Brands has rewarded its investors with a 14.03% price total return, indicating a strong performance in the market.
These metrics underscore the company's robust financial health and the potential for continued growth as highlighted by Canaccord Genuity. The recent closing price of 11953.28 USD reflects investor confidence following the positive earnings report and the subsequent rating and price target updates. For investors seeking to delve deeper into the prospects of Newell Brands, InvestingPro offers additional insights. Currently, there are PRONEWS24 additional InvestingPro Tips available that could provide a more nuanced understanding of the stock's potential. Utilizing the coupon code PRONEWS24, readers can access these insights with up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering a valuable resource for informed investment decisions.
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