UBS raised its price target on Newell Brands Inc (NASDAQ:NWL) to $5.00 from $4.50, an 11% revision to the firm’s valuation estimate, while retaining a Neutral rating on the consumer goods company. The move illustrates UBS’s cautious optimism about the company’s prospects while highlighting skepticism that improvements will quickly translate into sustained growth.
UBS analyst Peter Grom said investors are likely to focus discussions on whether the gains embedded in Newell’s outlook will materialize as expected. The firm acknowledged that Newell has presented what it called "concrete building blocks" intended to drive top-line expansion, but UBS also suggested many investors may adopt a "wait and see approach" given the company’s difficulties in achieving consistent revenue growth in recent years.
On valuation, UBS noted that Newell trades at roughly a 25% discount relative to small and mid-cap peers in the home and personal care space, a gap that is broadly consistent with its three-year average discount of 24%.
Newell’s most recent quarterly report showed mixed results. Sales were about 1% above estimates, while gross profit and adjusted EBITDA each landed roughly 1% below expectations. UBS’s response to Newell’s updated guidance included a prior reduction in its price target to $4.00, while still maintaining a Neutral rating on the grounds of a weak outlook and the company’s disclosure that fourth-quarter expectations were now projected at the low end of the previously provided range.
Other brokerages have taken differing stances. Canaccord Genuity reiterated a Buy rating and kept an $8.00 price target, signaling confidence in Newell’s multi-year turnaround strategy, which the firm characterizes as two and a half years in development. Morgan Stanley raised its target to $4.50 and kept an Equalweight rating, citing observable restructuring progress but also pointing to concerns about topline softness and potential margin volatility.
In a material operational step, Newell disclosed a global productivity initiative that will eliminate over 900 jobs, approximately 10% of its professional and clerical workforce. The company said the reductions will have minimal impact on manufacturing operations. The workforce reductions are scheduled to begin in the United States this month and continue internationally through 2026.
Canaccord’s investor meetings with Newell management reinforced that firm’s confidence in the company’s forward progress despite a difficult year. Taken together, the range of analyst reactions and the company’s own restructuring moves underscore an ongoing effort by Newell Brands to manage its financial and operational challenges while investors evaluate the credibility and timing of projected improvements.
Summary
UBS raised its price target on Newell Brands to $5.00 from $4.50 but left its recommendation at Neutral, reflecting cautious support for the company’s stated growth initiatives while flagging continued uncertainty. Recent quarterly metrics were mixed, and management has launched a global productivity plan that will reduce over 900 professional and clerical positions, with reductions starting in the U.S. this month and extending internationally through 2026.
Key points
- UBS increased its Newell price target to $5.00 (from $4.50) but maintained a Neutral rating, citing uncertainty around execution of growth plans.
- Newell’s fourth-quarter sales modestly outperformed estimates by about 1%, while gross profit and adjusted EBITDA were each roughly 1% below expectations.
- Management announced a global productivity program to cut more than 900 professional and clerical roles, representing about 10% of that staff segment; the reductions are expected to start in the U.S. this month and continue internationally through 2026.
Risks and uncertainties
- Execution risk - Investors remain uncertain whether the company’s "concrete building blocks" for growth will produce the anticipated topline improvement, affecting the consumer goods and home and personal care sectors.
- Profitability and margin volatility - Recent results showed slight misses on gross profit and adjusted EBITDA, and analysts note ongoing concerns about margin consistency, which can impact investor sentiment in retail and consumer products markets.
- Workforce reductions - The global productivity plan, while aimed at cost savings, introduces transition risks and potential short-term disruption, particularly in corporate functions, with minimal impact on manufacturing operations per company statements.