Why Did Wells Fargo Upgrade Newell Brands’ Stock?

By Jason Carr

In a report released yesterday, Bonnie Herzog from Wells Fargo upgraded Newell Brands (NYSE: NWL) to Buy, with a price target of $33. The company’s shares closed yesterday at $26.25, close to its 52-week low of $23.85.

Herzog wrote:

“We estimate “new NWL” FY19 EPS of $2.76. We raise our price target by $8 to $33 implying a 12x FY19E P/E multiple (post divestitures). Reasons for Our Upgrade – NWL shares are down -56% vs. S&P +15% in the last year. Looking forward, we believe the risk/reward is more positive for NWL shares, including several n.t. catalysts (finally!). Key reasons for our upgrade include: (1) Current Valuation not Reflective of NWL’s Underlying Value – We believe NWL’s individual businesses are very undervalued at the current price, and the pending divestitures will unlock significant value, which we believe will result in a re-rating of NWL shares; (2) “New Newell” Will Be More Fundamentally Attractive – While there is still question of what exactly will be left when all divestitures are completed (we take a shot at it below), we believe new NWL will be a simpler, faster growing, higher margin business, with significant exposure to e-commerce (20%+ of sales); (3) N.T.”

According to TipRanks.com, Herzog is a 4-star analyst with an average return of 12.1% and a 85.2% success rate. Herzog covers the Consumer Goods sector, focusing on stocks such as The Estée Lauder Companies Inc, Edgewell Personal Care, and Colgate-Palmolive.

Newell Brands has an analyst consensus of Moderate Buy, with a price target consensus of $28.78.

Newell Brands’ market cap is currently $12.74B and has a P/E ratio of 4.66. The company has a book value ratio of 0.9004.

Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of NWL in relation to earlier this year.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

Newell Brands, Inc. engages in the manufacture, marketing, and sale of consumer and commercial products. It operates through the following segments: Writing, Home Solutions, Tools, Commercial Products, Baby & Parenting, Branded Consumables, Consumer Solutions, Outdoor Solutions, and Process Solutions.