Piper Jaffray Upgrades Newell Rubbermaid (NWL) to Overweight
Piper Jaffray upgraded Newell Rubbermaid (NYSE: NWL) from Neutral to Overweight with a price target of $51.00 (from $43.00), saying they are positive on the Jarden (NYSE: JAH) deal and see a favorable entry point.
Analyst Stephanie Wissink commented, "We are upgrading shares from Neutral to Overweight and recommend adding to positions into early 2016 ahead of the JAH merger. We are positive on the deal - based on both economic and strategic value. We think JAH's brand portfolio will benefit significantly from NWL's disciplined development and commercialization process. We see $500M in cost synergies as a conservative estimate, representing 3.5% of the combined cost structure. Comparable mergers have yielded savings in excess of 5%, which would imply an incremental $200M. This assumes no revenue, innovation or pipeline synergies beyond operating consolidation. We see a pathway toward combined EPS near $3.00 on a FY2 basis ($3.30 on FY3) at the time of the deal closure (6 months from now). Applying a fair (in line with peers) 17x multiple to this estimate, we arrive at our adjusted PT of $51/sh."
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Shares of Newell Rubbermaid closed at $42.15 yesterday.