BMO Capital on Sherwin-Williams (SHW): 'we see this as both a short-term and long-term opportunity'

BMO Capital analyst John McNulty reiterated an Outperform rating and $340.00 price target on Sherwin-Williams (NYSE: SHW)

The analyst comments "Kelly-Moore (KM), a large West Coast private paint store/arch coatings company, filed for Chapter 11 bankruptcy owing to asbestos liabilities and will be closing operations immediately. We see this as an opportunity for SHW to grab "low hanging fruit" business in the immediate term. Longer term, we would expect SHW to push for further store density to gain a greater piece of the WC contractor/pro market. We see the bankruptcy as a positive for SHW given it eliminates one of SHW's larger regional competitors. Notably, based on our survey work, SHW's share in the Kelly-Moore territory was less dominant than elsewhere in the U.S. as KM had been a long-term regional player with reasonable brand loyalty. As such, we see this as both a short-term and long-term opportunity for SHW. Short term, while some of this share may already have shifted recently, given the immediacy of the announcement, we believe there is a "jump ball" for a lot of the business in the region. Long term, it provides an opportunity for SHW to open stores and increase its regional footprint in the area to gain permanent share (as a reminder SHW targets 80-100 new stores/year, and we believe this may further increase it focus in the region)."

For an analyst ratings summary and ratings history on Sherwin-Williams click here. For more ratings news on Sherwin-Williams click here.

Shares of Sherwin-Williams closed at $302.51 yesterday.

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