Newell Rubbermaid Shares Surge on Buy Rating

On Monday, Newell Rubbermaid (NASDAQ:NWL) shares rose by over 10% following an upgrade from Truist Securities. The firm changed its stance on the company's stock from Hold to Buy while simultaneously raising its price target from the previous $10.00 to $17.00. This adjustment indicates a significant upside potential for the stock relative to its closing price of $10.31 on Friday.

The stock response came after the analyst emphasized that Newell has successfully completed its transformation efforts, which have not yet fully captured investors' attention. The analyst noted that despite comprehensive restructuring and improvement efforts led by CEO Chris Peterson, the stock has underperformed relative to its sector over the past two years.

According to the analyst, Newell Rubbermaid has made significant progress since Peterson took office as President in March 2020. The company implemented two restructuring plans aimed at achieving annual savings of $220 million to $250 million, renewed leadership by changing over 75% of its division presidents, reduced its SKU count from 125,000 to 25,000, and improved its gross margins, which are expected to rise from 30.1% in 2022 to a projected 33.6% in 2024. Additionally, the company reduced its total debt by $416 million.

The analyst believes that the benefits of these extensive transformation efforts will become more apparent to investors by 2025, which is expected to be the first "normal" year of operations for the company since 2019. This projection is based on management's expectations for organic top-line growth in 2025.

Truist Securities' recommendation is based on the assumption that the market has not yet fully appreciated Newell Rubbermaid's transformation and operational improvements. Given the anticipated positive changes in the company's financials and operations, the analyst forecasts that the stock will be revalued more closely to its historical multiple, presenting a favorable opportunity for investors.