Whirlpool Benefits From Washer Tariffs, Currency Tailwinds, Raymond James Says In Upgrade

Whirlpool Corporation WHR received an upgrade following its fourth-quarter earnings beat Thursday.

The Analyst

Sam Darkatsh of Raymond James upgraded Whirlpool from Market Perform to Outperform and set a $200 price target.

The Thesis

While Whirlpool is far from a bulletproof story amid several industry challenges and regional challenges overseas, the Q4 beat and tariff on foreign washers place the company in a favorable position moving forward, Darkatsh said. (See the analyst's track record here.) 

Darkatsh sees the next few quarters as "plainly supportive, given the prospects for price hike stickiness, improved washer margins via safeguard tariff protections and conservative guidance which excludes FX tailwinds," he said. 

The relative performance of Whirlpool shares versus the market historically correlates with North American margins, strongly suggesting outperformance in the near term and a tactical asymmetric long play, Darkatsh said. 

President Donald Trump’s recent approval of safeguard tariffs on washer imports appears to be the biggest catalyst in the near-term for the industry and is clearly helpful to Whirlpool, according to Raymond James. 

Raymond James assumes $1 of EPS benefit related to washer margin improvement, placing the firm's EPS estimates ahead of guidance.

Whirlpool's 2018 EPS guidance range is from $14.50-$15.50, which excludes any meaningful benefit from tariffs or FX despite likely tailwinds from both, Darkatsh said. 

Price Action

Whirlpool shares were up 1.58 percent at $185.99 at the close Friday. 

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