Consumer goods company Newell Brands (NASDAQ:NWL) faces a shift in perspective as UBS downgrades it from Buy to Neutral, concurrently reducing its price target from $10 to $8.50. As a consequence, there is a pre-market trade decline of -2.00% to $7.84 in share value.

UBS had been optimistic about the impact of CEO Chris Peterson’s turnaround strategy on financial performance and the potential for multiple expansion. However, the brokerage now expresses disappointment in the pace of progress at this juncture, thereby prompting the downgrade.

While maintaining its belief in the effectiveness of the strategy, UBS asserts that a return to growth in the top line is crucial for capitalizing on the benefits, a milestone not expected until 2025. Projections indicate core sales to decrease by -5.2% in 2024, followed by a modest growth of +1.5% in 2025.

UBS also emphasizes that the current valuation, while suggestive of a degree of risk mitigation in the FY24 estimates, does not align with an optimistic outlook owing to the challenging top line backdrop.

The brokerage declares that for it to adopt a constructive stance once more, Newell Brands must exhibit either a more attractive valuation or provide greater clarity on the potential for profitable top-line growth.

Earlier in the month, Newell Brands outlined its projections for the full year 2024, anticipating a net sales decline of 8% to 5% and normalized earnings per share of $0.52 to $0.62, deviating from the consensus estimate of $0.76. The company also announced a restructuring plan, predicting annualized pre-tax savings of $65M – $90M, net of reinvestment, with an expected $55M to $70M savings in 2024.