Market Overview

5 Reasons Why Credit Suisse Turned Bullish On Whirlpool

Share:
5 Reasons Why Credit Suisse Turned Bullish On Whirlpool

Whirpool Corporation (NYSE: WHR) shares aren't far removed from its 52-week low of $143.11, but Credit Suisse said investors have multiple reasons to be bullish on the stock. 

The Analyst

Credit Suisse's Susan Maklari upgraded Whirpool from Neutral to Outperform with a price target lifted from $170 to $195.

The Thesis

  • The bullish case for Whirpool's stock is based on the following, Maklari said in a Monday note: 
  • Firsthand checks of prices on appliances after Memorial Day show an average 5-percent increase compared to the start of 2018, with washers and dryers accounting for the biggest gains, the analyst said. Encouragingly, industry sell-through remains unchanged, as big box retailers are noting double-digit sales comps in the appliance categories, she said. 
  • Raw materials account for around 60 percent of cost of goods sold, which implies input costs are "key to results for Whirlpool, Maklari said. While some commodity prices are up, including flat steel, Whirlpool hedges most of its annual steel needs — which implies rising inflation is "not insurmountable," the analyst said. 
  • Whirlpool's international turnaround is showing signs of progress, including a renegotiation of retail contracts in Europe and expectations for demand in Europe, Middle East and Africa to recover in the back half of 2018 and strengthen in Brazil, Maklari said. The company hasn't seen any impact to its China business amid recent trade announcements and threats of trade wars, she said. 
  • Whirlpool is expected to maintain its 2018 guidance in its second-quarter report, including EBIT margin expansion of 50 basis points in North America to 12 percent, Maklari said. 
  • Whirlpool's forecast of $1-$1.1 billion in free cash flow in 2018 marks a 50-percent improvement at the midpoint; this should be sufficient to support internal investments and capital return to shareholders, according to Credit Suisse. 

Price Action

Whirlpool shares were trading higher by more than 3 percent at the time of publication Monday. 

Related Links: 

8 Price Target Changes For Monday

Whirlpool: Why Goldman Sachs Is Turning Bearish On The Appliance Maker 

Latest Ratings for WHR

DateFirmActionFromTo
Nov 2019Initiates Coverage OnHold
Oct 2019MaintainsOverweight
Sep 2019UpgradesNeutralOverweight

View More Analyst Ratings for WHR
View the Latest Analyst Ratings

Posted-In: Appliances Credit Suisse retailers Susan MaklariAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (WHR)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
OGCCIBCDowngrades3.5
RYCIBCUpgrades120.0
JDNomuraMaintains42.0
RSITD SecuritiesMaintains4.8
NTGNMizuhoMaintains7.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Mid-Afternoon Market Update: Dow Up 180 Points; Nektar Therapeutics Shares Plummet

Ray Dalio To The Reddit Community: 'Think For Yourself'