Stanley Black & Decker (SWK) could see a "major positive catalyst" from news of a trade deal between China and the US, with easing global trade tensions expected to help offset earnings headwinds, UBS Securities said.
The firm said in a Monday note that the company previously estimated a $0.75 EPS headwind from tariffs on China, which accounts for a mid-teens percentage of its cost of goods sold. The recent reduction in China tariffs, to 30% from 145%, is expected to restore investor sentiment for Stanley Black & Decker, UBS added.
"We are increasingly confident in our 2026 and beyond estimates and see notable potential upside to our margin estimates as the US government continues to show signs of progress in trade negotiations," according to the note.
The brokerage also noted that Stanley Black & Decker is targeting $325 million in additional cost savings this year as part of its $2 billion cost-reduction plan through 2025.
While this could support margins, the firm still lowered its 2025 EPS forecast to $4.55 from $5.79, citing near-term challenges such as delayed price increases and demand uncertainty reflected in company guidance.
UBS lowered its price target on Stanley Black & Decker's stock to $100 from $120, while reiterating its buy rating.
Price: 73.34, Change: +0.81, Percent Change: +1.12
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