Sherwin-Williams (SHW) Stock Forecast & Price Target

Sherwin-Williams maintains a strong financial outlook due to its leading position in the U.S. architectural paint market, underscored by a gross margin increase of 60 basis points year-over-year, now reaching 49.4%. The company anticipates annual savings of $80 million from ongoing restructuring efforts, which is expected to enhance efficiency and profitability in the second half of the year. Additionally, even with modest increases in selling, general, and administrative expenses anticipated, management projects growth in gross margins in the latter half of the year, indicating potential for sustained financial improvement.

The analysis indicates a negative outlook for Sherwin-Williams due to a revised demand forecast, with the company now expecting sales growth in 2025 to be at or slightly below the lower single digits, a downward adjustment from previous expectations. Additionally, the continued challenge of high interest rates and affordability issues is anticipated to adversely impact the housing market, further dampening sales for existing and new homes. Moreover, in a potential recession scenario, Sherwin-Williams's EBITDA is projected to decline approximately 11% from 2024 levels, resulting in an EBITDA around $3.99 billion, which raises concerns about the company's financial stability moving forward.