Analysts: Get Real, Whirlpool Has 32% Upside

• Whirlpool Corporation WHR shares are down 15.31 percent year-to-date, even after hitting a high of $215 on March 2.
• RBC Capital Markets’ Robert Wetenha upgraded the rating on the company from Outperform to Top Pick, while maintaining a price target of $213.
• The company is poised to benefit from significantly lower raw material costs and a better price/volume mix, Wetenha said.

Analyst Robert Wetenha mentioned that concerns surrounding the company’s weak performance in Latin America appear to be overblown. He added that the Latin America segment accounted for only 23 percent of the FY14 actual revenues and will contribute merely 16 percent of the FY15 estimated revenues.

In the report RBC Capital Markets noted, “WHR has exhibited a correlation of 0.75 with the USD/BRL since the beginning of 2015. This reflects our belief that many investors view WHR as being heavily levered to emerging markets on a generic level and to Brazil specifically.”

Wetenha believes that the investor fears over Brazil are fully reflected in Whirlpool’s share price, which has declined by 16.6 percent year-to-date and by 33 percent from the March 2015 high.

There are multiple positives in the Whirlpool story from a “price/volume/mix perspective in tandem with materially lower raw material costs,” Wetenha said. The company’s acquisition of Indesit will also provide incremental upside through the realization of acquisition synergies.

The EPS estimates for FY15 and FY16 have been reduced from $12.47 to $12.29 and from $16.64 to $16.00, respectively, to reflect currently related headwinds.