Investors might be painting the downside to Sherwin-Williams Co (NYSE SHW) with too broad a brush, Wells Fargo said Monday in explaining an upgrade of the stock.
The Analyst:
Wells Fargo analyst Stephen East upgraded Sherwin-Williams to Outperform from Market Perform and boosted his price target to $475.
The Thesis
Investors may be overlooking the potential upsides of Sherwin-Williams stock, while overweighing risks, East said.
Wells Fargo’s earnings per share estimate for 2019 is 2 percent above the Street estimate even accounting for downsides, including a slow down in consumer paint demand. Raw materials costs, which led to price increases, have begun to moderate, East noted, but the higher prices appear to be sticking.
“We believe any inline, to slightly better than expected, results over the next year will be inordinately rewarded,” East wrote in a note. “SHW is trading at a significant discount to historical averages and has the best earnings growth of the group, we believe providing material potential upside.”
Sherwin-Williams is scheduled to report earnings on Jan. 31.
Price Action
Sherwin-Williams was trading up marginally to close at $397.80.
Related Links:
Sherwin-Williams Paints a Solid Outlook for Shareholders With Q4 Financial Reports
This Is Why Sherwin-Williams Shares Could See 15% Upside In The Next Year
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