Wells Fargo upgrades Sherwin-Williams to overweight, cites limited headwinds from tariffs
Sherwin-Williams looks to be relatively tariff-proof, according to Wells Fargo. The bank upgraded shares of the paint and coatings manufacturer to an overweight rating from equal weight. Analyst Michael Sison's price target of $420, up from $350, corresponds to a potential upside of 21%. Shares of Sherwin-Williams have added 2.4% this year. SHW 1Y mountain SHW 1Y chart Sison pointed out that Sherwin-Williams should be strong enough to hedge against any potential tariff headwinds. "SHW noted in its release that given the majority of its revenue comes from the US (80% from the US, 2% from China), tariff impacts are likely limited to raw materials," he wrote. "However, the majority of raw materials are sourced from the regions in which the related products are manufactured. Thus, while SHW does plan to update guidance with results in July, tariffs are unlikely to have a significant impact as it stands." As another reason for the upgrade, Sison pointed to Sherwin-William's strong fundamental backdrop, including its "exceptional execution" that continues to drive earnings growth. The company's strong pricing has also continued to raise its paint stores margin growth. "We upgrade SHW to OW based on consistent above-market growth despite a challenging macro. We are encouraged by SHW's share gains, new account wins, and efficiency/cost improvements across its segments, and believe these actions position the company as the premier name to own for a housing recovery," he wrote. Another catalyst comes in the form of the company's mid-February announcement to acquire a Brazilian decorative paints business from BASF for $1.15 billion in cash. The deal is expected to close in the latter half of this year.
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