Analyst Laurence Alexander from Jefferies maintained a Buy rating on Sherwin-Williams Company (SHW – Research Report) and keeping the price target at $423.00.
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Laurence Alexander’s rating is based on Sherwin-Williams’ strategic acquisition of BASF’s coatings business in Brazil, which diversifies its regional footprint, albeit with some initial margin dilution. The acquisition is priced at $1.15 billion and is expected to close in the second half of 2025. Despite the initial return on invested capital being around 5%, the deal is anticipated to enhance the company’s scale in industrial coatings, potentially leading to significant growth synergies.
Moreover, Sherwin-Williams’ financial outlook appears strong, with a forecasted decrease in Net Debt/EBITDA from 1.6x in 2025 to 0.8x by 2027. Additionally, the company projects free cash flow before dividends to reach $3.4 billion in 2026 and $3.8 billion in 2027, alongside expected stock buybacks that could contribute 1-2% annually. These factors collectively contribute to a positive outlook, justifying the Buy rating.
In another report released on February 14, Morgan Stanley also maintained a Buy rating on the stock with a $405.00 price target.