Whirlpool more aggressive as it looks to regain lost share - Goldman Sachs

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By Sam Boughedda

Goldman Sachs reinstated a Neutral rating and $160 price target on Whirlpool (NYSE:WHR) in a note to clients Thursday.

Analysts there stated they moved to reinstate the rating after the completion of Whirlpool's $3 billion acquisition of InSinkErator. In addition, the analysts added that their view reflects the weakening housing backdrop, combined with normalizing supply chains and promotional activity, which they believe will weigh on volumes and earnings through 2023.

"This is furthered by a pause in buybacks as cash flows are redirected to paying down debt related to the deal, leaving the stock range bound," wrote the analysts.

Key factors in Goldman Sachs' view include a cautious North American volume outlook for 2023, normalization in promotional activity following similar moves in production, and moderating input costs and restructuring to support margins.

"After two years of unprecedented growth, YTD industry shipments are down 6% YOY through September, and are on track for a similar full-year decline. Given our forecast single family starts will contract 17% in 2023, we look for appliance demand to contract an additional 3% next year, pressuring the company's volumes and earnings. Since 2018, in periods when AHAM shipments declined, WHR has underperformed the S&P 500 and our building product coverage by 13% and 2%, respectively," the analysts added.

"Whirlpool, specifically, is becoming more aggressive relative to last year as it looks to regain lost share, suggesting above-average price/mix pressure in the quarters ahead. That said, we forecast a 2% contraction in WHR's North America core appliance volumes in 2023, vs the industry -3%, as it recoups some lost ground."