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Use the recent uptick in Whirlpool stock to cut exposure: BofA

By:
on Oct 26, 2022
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  • Bank of America downgrades Whirlpool Corporation to "underperform".
  • Analyst Elizabeth Suzuki cites lowering demand for the dovish view.
  • Whirlpool stock is already down nearly 45% versus the start of 2022.

Whirlpool Corporation (NYSE: WHR) has climbed nearly 10% since last Friday – an uptick that a Bank of America analyst suggests should be used to pull out of this stock.

Whirlpool stock could slide another 14%

Elizabeth Suzuki downgraded the home appliances company this morning to “underperform”. Her new, lowered price objective of $119 translates to about a 14% downside from here.

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Higher material and transportation costs, she argues, are hitting margins. Coupled with a poor pricing environment and lowering demand, Suzuki added, now is not the time to own Whirlpool Corporation.

While long-term outlook for renovation spending and new home construction is relatively favourable, the more near-term headwinds of a potential recession, slowing new home construction and inflation could hinder earnings growth.

Versus the start of 2022, Whirlpool stock is already down close to 45%.

Why else is she dovish on Whirlpool

Monthly growth in appliance volumes in the United States stood at 86.6 million units last year, according to the Association of Home Appliance Manufacturers (AHAM).

In comparison, this year, it’s at 80.4 million units to date. Consequently, Whirlpool reported disappointing results last week for its fiscal third quarter and lowered its full-year guidance. Further commenting on the Whirlpool stock, the BofA analyst said:

If Q4 appliance volumes decline at the Q3 pace of 13%, full-year 2022 volumes could be down 9.0% YoY. We view the risk as more skewed to the downside that demand weakens further given rising rates, inflation, and slowdown in housing.

She trimmed her EPS estimate for next year to $17. On the plus side, though, Whirlpool is a dividend stock with a yield of over 5.0% at present.