Newell Brands (NWL) faces continued cost pressures and weaker discretionary demand that could weigh on earnings versus consensus in the back half of 2026 and fiscal 2027, Morgan Stanley analysts said in a Wednesday note.

The analysts said the company's semi-discretionary portfolio leaves it exposed to macroeconomic softness, particularly following recent geopolitical disruptions, while limited pricing power may constrain its ability to offset rising input costs.

Morgan Stanley highlighted risks from higher oil-related costs and weakening consumer sentiment, which could pressure margins and demand.

Flagging more prudent US consumer spending in the coming months as well as demand risk in NWL's international segment, which accounts for about 30% of the sales mix, the analysts warned of pressures on demand and margins.

Newell Brands raised its fiscal 2026 outlook, now expecting core sales to fall 1% or rise 1% versus a prior forecast for a range of a 2% decline to flat and adjusted earnings per share of $0.56 to $0.60 versus $0.54 to $0.60 previously. For Q2, the company guided adjusted EPS of $0.16 to $0.19, below consensus expectations, the report added.

Morgan Stanley downgraded its rating on the stock to underweight from equal weight and cut its price target to $3.50 from $4.00.

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