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Newell Profit Could Face Pressure Through 2027 Amid Iran War Headwinds, Morgan Stanley Says in Downgrade
Wire

Newell Profit Could Face Pressure Through 2027 Amid Iran War Headwinds, Morgan Stanley Says in Downgrade

Newell Brands' (NWL) bottom-line could face pressure in the back half of 2026 and next year amid lingering cost pressures and a weak demand environment because of the Middle East conflict, Morgan Stanley said in a note e-mailed Wednesday.The brokerage downgraded its rating on the consumer products manufacturer's stock to underweight from equal-weight and reduced its price target to $3.50 from $4.Shares of the maker of Sharpie markers were up 0.8% in afternoon trade. So far this year, the stock has lost 3.8% in value.The company's profit likely faces downside versus consensus in the back half of this year and 2027 amid cost pressures potentially above its management's outlook, as well as "greater risk" from demand pressure, with consumer sentiment deteriorating following the US-Israel war with Iran, Morgan Stanley said in a note to clients.Earlier this month, a survey by the University of Michigan showed that US consumer sentiment continued to fall in May as cost pressures tied to the Middle East conflict sent the measure tumbling to all-time lows."We do give (Newell's) management credit for progress in a recent internal turnaround, with productivity ramping up, improved execution, and a return to core sales growth expected in (the second quarter) for the first time since 2022," Morgan Stanley said.Earlier in May, Newell raised its 2026 sales outlook, crediting tax refunds, operational improvements, and better-than-expected consumer demand."However, (the company) is not well-suited (versus) external pressures, with limited pricing power relative to cost pressure, as well as more risk from weaker consumer spending post the Iran conflict with its more discretionary portfolio (versus) staples peers," Morgan Stanley wrote.The Iran war started at the end of February, resulting in disruptions to energy shipments at the crucial Strait of Hormuz and sending prices soaring."We also worry that (Newell) has limited pricing power to offset higher costs, with post-(first quarter) negative cost revisions for (2026) cushioned by tariff relief that offset half of the incremental cost pressure post the Iran conflict," Morgan Stanley said.Price: $3.54, Change: $-0.01, Percent Change: -0.42%

$NWL
Wire

Newell Brands Faces Lingering Cost Inflation Risks Amid Weak Demand Outlook, Morgan Stanley Says

Newell Brands (NWL) faces continued cost pressures and weaker discretionary demand that could weigh on earnings versus consensus in the back half of 2026 and fiscal 2027, Morgan Stanley analysts said in a Wednesday note.The analysts said the company's semi-discretionary portfolio leaves it exposed to macroeconomic softness, particularly following recent geopolitical disruptions, while limited pricing power may constrain its ability to offset rising input costs.Morgan Stanley highlighted risks from higher oil-related costs and weakening consumer sentiment, which could pressure margins and demand.Flagging more prudent US consumer spending in the coming months as well as demand risk in NWL's international segment, which accounts for about 30% of the sales mix, the analysts warned of pressures on demand and margins.Newell Brands raised its fiscal 2026 outlook, now expecting core sales to fall 1% or rise 1% versus a prior forecast for a range of a 2% decline to flat and adjusted earnings per share of $0.56 to $0.60 versus $0.54 to $0.60 previously. For Q2, the company guided adjusted EPS of $0.16 to $0.19, below consensus expectations, the report added.Morgan Stanley downgraded its rating on the stock to underweight from equal weight and cut its price target to $3.50 from $4.00.Price: $3.51, Change: $-0.04, Percent Change: -1.13%

$NWL
Research

Morgan Stanley Downgrades Newell Brands to Underweight From Equalweight, Adjusts PT to $3.50 From $4

Newell Brands (NWL) has an average rating of hold and mean price target of $4.94, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)

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Wire

Newell Brands Posts Q1 Core Sales Beat, Signals Q2 Growth, RBC Says

Newell Brands (NWL) reported a Q1 core sales beat, supporting management's confidence in a return to growth in Q2, RBC Capital Markets said Monday in a report.Stronger-than-expected category demand showed the company's revised commercial strategy is gaining traction, including a return to positive core sales growth in the learning and development division and solid gains in the baby segment, the report said. The home and commercial unit and the outdoor and recreation segment also beat internal targets, RBC said.Margins expanded despite tariff and inflation headwinds, aided by pricing and productivity improvement, while six of the top 10 brands posted point-of-sale growth and market-share gains, the report said.Rising input-cost headwinds tied to the Middle East conflict, including higher resin and diesel prices, may weigh on margins, particularly in Q2, the report said.RBC maintained a sector perform rating on Newell Brands stock with a price target of $4.Price: $4.63, Change: $+0.08, Percent Change: +1.65%

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Sectors

Sector Update: Consumer Stocks Mixed Late Afternoon

Consumer stocks were mixed late Friday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) decreasing 0.2% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) rising 0.6%.In sector news, Spirit Airlines failed to secure sufficient support from certain bondholders and the federal government for a $500 million lifeline, The Wall Street Journal reported. As a result, the airline is preparing to cease operations, the report said.In corporate news, Colgate-Palmolive (CL) shares rose 1.8% after the company reported Q1 results that topped analysts' expectations.The United Auto Workers union intends to hold a vote next week over whether to strike at a Stellantis (STLA) pickup truck factory in Suburban Detroit, Bloomberg reported, citing a UAW podcast. Stellantis shares were down 1.6%.Newell Brands (NWL) raised its 2026 sales outlook, crediting tax refunds, operational improvements, and better-than-expected consumer demand. Its shares jumped past 9%.Estee Lauder (EL) lifted its full-year earnings outlook on Friday as the cosmetics company said it aimed to lay off more staff than previously planned as part of an ongoing restructuring program. Its shares rose 2.4%.

$CL$EL$NWL$STLA
Sectors

Sector Update: Consumer Stocks Mixed Friday Afternoon

Consumer stocks were mixed Friday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) decreasing 0.2% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) rising 0.7%.In sector news, Spirit Airlines failed to secure sufficient support from certain bondholders and the federal government for a $500 million lifeline, The Wall Street Journal reported. As a result, the airline is preparing to cease operations, the report said.In corporate news, Estee Lauder (EL) lifted its full-year earnings outlook on Friday as the cosmetics company said it aimed to lay off more staff than previously planned as part of an ongoing restructuring program. Its shares rose 3.2%.Newell Brands (NWL) raised its 2026 sales outlook, crediting tax refunds, operational improvements, and better-than-expected consumer demand. Its shares jumped past 9%.Harley-Davidson (HOG) is recalling about 88,039 motorcycles in the US due to a defect involving the airbox backplate breather port, Reuters reported Friday, citing a statement from the National Highway Traffic Safety Administration. The company's shares were up 1.9%.

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US Markets

Newell Brands Lifts 2026 Sales Outlook as Tax Refunds Cushion Macro Pressure

Newell Brands (NWL) raised its 2026 sales outlook, crediting tax refunds, operational improvements, and better-than-expected consumer demand.The company now expects full-year net sales to range from flat to up 2%, compared with its prior view of down 1% to up 1%. Analysts surveyed by FactSet expect $7.23 billion.Newell also lifted the lower end of its 2026 earnings guidance to $0.56 from $0.54, keeping the upper end at $0.60. Analysts expect $0.56."We believe tariff help will offset about 50% of the previously mentioned incremental commodity hurt, with the remainder being offset by higher levels of productivity savings and targeted price and promotion adjustments where necessary," CEO Christopher Peterson said the earnings call, according to a FactSet transcript.Newell shares rose 9.4% in Friday trading and have gained 20% this year.The company said tax refunds are effectively neutralizing the pressure from rising fuel and energy prices."Tax refunds, much of which came into the market in March and April, do appear to be offsetting the consumer impact from gas and energy," Peterson said.First-quarter revenue fell to $1.55 billion from $1.57 billion a year earlier, beating Wall Street's estimate of $1.51 billion. The loss widened to $0.05 per share from $0.01, compared with the consensus for a $0.09 loss.Consumer spending in key categories outperformed the company's expectations, and growth among higher-income shoppers helped offset softness in lower-income segments, Peterson said."We experienced better-than-expected consumer demand for our products driven by improving point-of-sale and market share trends," he said.Price: $4.47, Change: $+0.39, Percent Change: +9.44%

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US Markets

Stocks Mostly Up Pre-Bell as Investors Await More Corporate Earnings

The benchmark US stock measures were mostly pointing higher before the open Friday as investors await the week's final round of corporate earnings and track ongoing Middle East tensions, with no apparent signs of progress toward a peace deal between Washington and Tehran.The S&P 500 rose 0.1% and the Dow Jones Industrial Average added 0.2% in premarket activity, while the Nasdaq was off 0.1%. The indexes finished Thursday's trading session in the green, with the S&P 500 and Nasdaq logging new closing highs.Oil giants Exxon Mobil (XOM) and Chevron (CVX) are scheduled to release their latest quarterly results before the bell, along with Colgate-Palmolive (CL), Estee Lauder (EL), Moderna (MRNA), Magna International (MGA) and Newell Brands (NWL).Shares of Apple (AAPL) advanced 2.8% pre-bell as the iPhone maker's fiscal second-quarter results topped market estimates. Reddit (RDDT) climbed 16% after the social media platform recorded better-than-expected first-quarter results and issued an upbeat revenue outlook for the ongoing three-month period at the midpoint. Nvidia (NVDA) rebounded 0.4% following a 4.6% decline at the close of Thursday.President Donald Trump told reporters at the White House on Thursday that the US will maintain its naval blockade of Iranian ports, according to Bloomberg News. "Their economy is crashing, the blockade is incredible," Trump reportedly said. "So we'll see how long they hold out."Iran's new supreme leader, Mojtaba Khamenei, reportedly said Thursday that Iran will defend its nuclear and missile capabilities.West Texas Intermediate crude oil inclined 0.3% to $105.43 a barrel before the opening bell, while Brent increased 0.9% to $111.37.US economic growth fell short of Wall Street's expectations in the first quarter as spending slowed amid inflationary pressures, government data showed Thursday.Separate official data showed that inflation, as measured by the personal consumption expenditure price index, accelerated in March to the fastest pace since mid-2022 as the Middle East conflict sent energy prices soaring.Treasury yields were down in premarket action, with the two-year rate nudging 0.1 basis point lower to 3.88% and the 10-year rate decreasing 0.8 basis point to 4.38%.Friday's economic calendar has the final Purchasing Managers' manufacturing index for April at 9:45 am ET, followed by the Institute for Supply Management's manufacturing index for the same month at 10 am. The weekly Baker Hughes oil-and-gas rig count posts at 1 pm.Gold fell 1.1% to $4,578 per troy ounce, while bitcoin rose 1.1% to $77,248.

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Wire

Newell Brands Near Bottom in Q1, but Risks, Other Negative Factors Remain, RBC Says

Newell Brands (NWL) could see Q1 as the low point of the year, with sales expected to improve from Q2, but consumer weakness, higher input costs, and Middle East risks keep the near-term outlook unclear, RBC Capital Markets said in a note Wednesday.Q1 results should be close to company guidance and market estimates because the quarter's pressure is already well understood, but the investment firm said it expects management to keep full-year guidance unchanged, while signaling that demand should improve as shelf resets, new products, and distribution gains help later quarters.RBC said small appliances and general merchandise remain under pressure, while younger consumers and value-focused shoppers appear more sensitive to the economy, as tracked channel sales are down about 2%, with pricing becoming less negative but volumes weakening from the previous period.Higher commodity, transport, and sourcing costs from Middle East disruptions could pressure margins, though Newell's supply chain improvements and savings efforts may soften some of the impact, according to the note.RBC kept the company's sector perform rating and $4 price target.Price: $3.90, Change: $-0.11, Percent Change: -2.74%

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