Jefferies Initiates Newell At Hold (NWL)

Jefferies & Co. is initiating coverage on Newell Rubbermaid NWL with a Hold rating and a $24 price target on shares. In the research note sent to clients, Jefferies writes, "We believe NWL's strategy to cut costs and prune its portfolio, as well as fix its capital structure, is on target, but its current slow growth profile, relatively low gross margins and reliance on mature markets like the US, Western Europe and Japan leave us on the sidelines." Jefferies goes on to say, "Despite its efforts to prune the portfolio, NWL's brands are still spread among what we think are too many categories with completely different sales channels – from a Sharpie pen sold at an office supplies store, to a wire labeler sold through a direct sales network to electricians, to custom blinds sold at a specialty store. Such complexity makes it difficult for NWL to fully leverage its scale across its multiples business lines. Also, NWL's relatively low gross margins leave it disproportionately exposed to commodity inflation, which remains one of our top concerns at present for the group in general." Shares of NWL gained 24 cents yesterday to close at $18.24, a gain of 1.3%.