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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%
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