By Sam Boughedda
Goldman Sachs analysts upgraded shares of Whirlpool (NYSE:WHR) to Buy from Neutral, with a $160 per share price target, down from $170, in a note Tuesday.
Whirlpool shares jumped on the back of the upgrade, currently trading almost 4% higher on the day above the $134 mark.
The analysts feel the company's valuation represents a compelling entry point, pointing to positives, such as recently announced initiatives by the company that align with achieving longer-term revenue, margin, cash flow, and return targets. Those initiatives include the majority stake divestiture of its unprofitable European operations, acquiring high-quality assets in InSinkErator, and cutting $500 million in structural costs.
"More recently, our channel checks indicate a stabilization in the promotional cadence in North America through March, supporting industry pricing as commodities remain volatile, driving profitability ahead of 2019," explained the analysts, who feel that although near-term visibility is limited and execution risk remains, they are "more than reflected in the current valuation."
The analysts also highlighted the industry's defensive nature relative to other building product categories, with over 50% of demand driven by replacement, partially mitigating the impact of a challenging macro backdrop.
"Although the near-term path is likely to remain choppy, we believe the current valuation provides an attractive entry point," they declared.