Why Newell Brands Stock Raced More Than 5% Higher Today
Key Points
Newell is the company behind familiar brands such as Rubbermaid.
It's also quite a heavily shorted stock.
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Volatile stock Newell Brands (NASDAQ: NWL), the company with a portfolio of familiar household brands such as Rubbermaid, kitchen gear, and Sharpie pens, saw an encouraging rebound in Thursday's trading. Bolstered by not one, but two analyst price target raises, investors eagerly bought the stock, and it closed the day over 5% higher.
2 bullish bumps
Of the two increases, the one made by Andrea Teixeira of JPMorgan Chase's J.P. Morgan was the more impactful. She cranked her Newell fair value assessement 40% higher, to $7 per share from the previous $5. In doing so, the analyst maintained her overweight (buy, in other words) recommendation on the consumer goods conglomerate.
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A more cautious raise was made by UBS' Peter Grom in his latest Newell update. The pundit now believes the stock is worth $4.75 per share, up from his previous estimate of $4.25. Unlike Teixeira, he isn't necessarily positive on the company, as he kept his neutral recommendation intact.
Both moves came less than two weeks before Newell is slated to publish its second-quarter results. On average, according to data compiled by Yahoo! Finance, pundits tracking Newell stock are modeling $1.97 billion for revenue, which would be 2% higher year over year. While they're expecting a net profit of $0.19 per share, that's down from $0.24 a year ago.
A short story
There continues to be plenty of bearish sentiment on Newell, however. In recent weeks, it's already considerable short interest -- one gauge of negative investor outlook -- has risen notably to more than 57 million shares out of a total of under 425 million shares outstanding.
Much of this stems from concerns about Newell's considerable debt load, which, despite some recent reductions, remains heavy. In the most recently reported quarter, long-term borrowings totaled almost $5 billion, nearly half of total liabilities. Some stocks are volatile for good reason, and for the moment, I'd stay away from this one.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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