Newell Brands Drops 7% On Dim Outlook

Shares of Newell Brands (NWL) fell 7.5% on Friday even after reporting better-than-expected 2Q earnings. At the same time though, the company said it expects supply-chain disruptions and soft demand to continue to impact its near-term financial performance. Newell Brands didn’t provide 3Q guidance, citing the economic and business uncertainties due to the coronavirus crisis.

The company said, “it is difficult to predict the trajectory and pace of the virus, the duration of social distancing and shelter-in-place mandates, the timing of school and office re-openings, and the timing and extent of economic recovery.”

Meanwhile, Newell’s 2Q normalized EPS dropped 14.9% to $0.30 year-on-year beating analysts’ expectations of $0.18. Revenues fell 30.2% to $2.11 billion surpassing Street estimates of $2.03 billion. Supply-chain disruptions and unfavorable foreign currency exchange rates took a toll on Newell’s overall quarterly performance as core sales declined 12.6%.

On July 16, JPMorgan analyst Andrea Faria Teixeira increased the stock’s price target to $17 from $13 and maintained a Hold rating, saying that stay-at-home measures are likely to drive demand for household and personal care products. In a research note she added that “consumers seem to be diverting their wallet from travel and entertainment to at-home consumption.”

Currently, NWL has Hold analyst consensus. The average price target of $16.17 implies downside potential of 1.4%. (See NWL stock analysis on TipRanks).