Newell Brands' Leadership Transition Offers Opportunity, Says Analyst - Newell Brands (NASDAQ:NWL)

Raymond James analyst Olivia Tong reiterated a Strong Buy rating on the shares of Newell Brands Inc NWL and lowered the price target from $18 to $17.
The company reported 4Q results that reflected more challenging macros and retailer inventory destocking, with core sales -9.4% y/y and EPS $0.16.
The analyst said that the challenges continue into 2023, materially impacting 1H and leading to NWL’s cautious approach to the FY outlook.
FY core sales are expected to be -8% to -6% and EPS $0.95-1.08, with the decline attributed to category weakness, retail destocking, high input costs that have yet to lap, as well as higher interest expense, tax and other non-operating expenses, added the analyst.
Notwithstanding its current challenges, the analyst expects NWL to begin stabilizing as the year progresses, helped by alleviating cost pressures, restructuring benefits, and easing comps.
Also Read: Newell Brands Unveils 'Project Phoenix' Savings Initiative; Cuts 13% Of Office Positions & Consolidates Segments
The inventory and category dynamics are certainly not unique to NWL. While 2023 is panning out to be a reset year for the company, the changes NWL is making to restore profitable growth position it considerably better to compete when conditions improve, the analyst said.
SKU reduction continues, finishing at 28k at 2022-end, down from 36k in 2021 and 100k+ in 2018, and the benefits of Project Ovid have yet to be materially realized while the recently announced Project Phoenix is just beginning, added the analyst.
Post-reset, the analyst thinks NWL can return to core sales growth in-line with its reiterated evergreen target of +low single-digits.
Current President Chris Peterson, who will be promoted to CEO in May, also noted a broader review of NWL’s portfolio and strategic direction, an important move as it consolidates divisions.
With action items to improve profit, a more balanced portfolio vs. non-durable peers, and manageable leverage, NWL trades at a discounted multiple of 14x P/E on 2023E vs. a pre-Jardin historical range of 15-19x, the analyst specified.
Price Action: NWL shares are trading lower by 0.91% at $14.64 on the last check Monday.
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