On Monday, Newell Rubbermaid (NASDAQ:NWL) saw its shares climb over 10% following an upgrade from Truist Securities. The firm shifted its stance on the company's stock from Hold to Buy, simultaneously raising the price target to $17.00 from the previous $10.00. This adjustment suggests a significant upside from the stock's Friday closing price of $10.31.
The company's stock response comes after the analyst's remarks highlighting the successful completion of Newell's turnaround efforts, which had not fully captured investor attention. The analyst noted that despite the comprehensive restructuring and improvement efforts under CEO Chris Peterson's leadership, the stock had underperformed in comparison to its sector over the last two years.
According to the analyst, Newell Rubbermaid has made substantial progress since Peterson took over as President in March 2020. The company has executed two restructuring plans aimed at achieving $220 million to $250 million in annualized cost savings, overhauled leadership with more than 75% of business division heads replaced, slashed its SKU count from 125,000 to 25,000, and improved gross margins, with an increase from 30.1% in 2022 to an expected 33.6% in 2024. Additionally, the company has reduced its total debt by $416 million.
The analyst believes that the fruits of these laborious turnaround efforts will become more evident to investors by 2025, which is anticipated to be the first "normal" operating year for the company since 2019. This projection is based on the expectation of organic top-line growth for the company, as forecasted by management for 2025.
Truist Securities' recommendation is grounded on the premise that the market has yet to fully appreciate Newell Rubbermaid's transformation and operational improvements. Given the expected positive changes in the company's financials and operations, the analyst anticipates that the stock will be revalued closer to its historical multiple, presenting a favorable opportunity for investors.
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