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.

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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).