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Why No Analysts Are Recommending a ‘Sell’ for Sherwin-Williams

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Analysts’ consensus on Sherwin-Williams

The number of analysts actively tracking Sherwin-Williams (SHW) has been on the rise, from 21 analysts at the beginning of 2017 to 23 analysts currently. About 70% of them have recommended a “buy” for the stock, and 30% have recommended a “hold.” None of them have recommended a “sell.”

Analysts’ consensus on SHW indicates a 12-month target price of $418.20, which implies a return potential of 7.8% from the closing price of $388.03 on November 16, 2017. The consensus target price has shown an upward trend from $378 in September.

Why analysts are saying ‘hold’ or ‘buy’

Sherwin-Williams reported better-than-expected earnings and revenue in 3Q17. It also made a downward revision to its fiscal 2017 adjusted EPS (earnings per share) to $14.85–15.15 compared to the earlier guidance of $14.80–$15.20. That can be primarily attributed to the hurricanes during the quarter. However, as SHW continues to integrate Valspar, the cost-saving synergy effect is expected to improve its earnings and add value to shareholders. As a result, many analysts are recommending either a “hold” or a “buy” for the stock.

Individual brokerage firm recommendations

  • UBS (UBS) has given Sherwin-Williams a target price of $395, which implies a potential return of 1.8% over the closing price of $388.03 on November 16, 2017.
  • JPMorgan Chase (JPM) has raised its target price for SHW to $390, implying a return potential of 0.50% from the closing price of $388.30 on November 16, 2017.
  • Credit Suisse (CS) has rated Sherwin-Williams an “outperform” and recommended a target price of $410. The target price implies a potential return of 5.7% over the closing price on November 16, 2017.

Investors looking to hold Sherwin-Williams indirectly can invest in the PowerShares DWA Industrials Momentum ETF (PRN). PRN has invested 4.7% of its portfolio in Sherwin-Williams.

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