NWL - Newell Brands suffers downgrades on concerns over top line growth slow demand recovery

2023-10-30 08:57:36 ET

Newell Brands ( NASDAQ: NWL ) shares fell premarket on Monday after both JPMorgan and Truist Securities downgraded their recommendations on the consumer goods company.

JPMorgan downgraded Newell ( NWL ) from Overweight to Neutral, saying that category demand for most of its products remain subdued. Valuation is attractive, in JPMorgan's view, but with no conviction on when Newell ( NWL ) can inflect its sales performance.

"3Q23 earnings results were disappointing again and the earnings call did not provide much reassurance that NWL's challenges will be overturned in the short to medium term. In fact, management sounded more negative highlighting that demand will likely stay subdued for 12-18 months, which added to share losses from reduction in shelf space and FX headwinds, and this leads us to believe 2024 will be another challenging year with sales declines despite the easier comparisons," JPMorgan analysts said.

Newell ( NWL ) shares fell last Friday after the company reported Q3 results and issued an updated 2023 guidance that was below consensus.

Truist Securities, meanwhile, downgraded the stock from Buy to Hold, saying that the company is "at least a year away from organic growth." Its analysts noted that, "the post-pandemic category volatility has plagued numerous consumer goods companies in 2023. For NWL, we believe some of this was exacerbated by management's hard push to streamline and right size the business despite the volatility."

With the stock down over 50% YTD, Truist does not see any growth catalysts for the company, adding "Newell ( NWL ) will need to show at least some top line growth for a quarter or two before it can see some improvement to its valuation."

Seeking Alpha's Quant system rates Newell ( NWL ) as Sell

More on Newell Brands

• Newell Brands Plunged On Serious Concerns Over The Company's Future
• Newell Brands Inc. (NWL) Q3 2023 Earnings Call Transcript
• Newell Brands: Not Attractive At This Price
• Newell Brands off 4% on updated 2023 guidance
• Newell Brands Non-GAAP EPS of $0.39 beats by $0.16, revenue of $2.04B misses by $80M

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