Spectrum Brands (SPB) merits some caution in its fiscal Q4 due to low near-term visibility and soft consumer demand that may worsen amid incremental pricing, but the company still has an attractive long-term story, RBC Capital Markets said Tuesday in a preview of results.

Spectrum is seeing a "turbulent" fiscal 2025 due to tariffs and lackluster investor appetite, which led the company to pivot its strategy to protect its balance sheet and bottom-line, all amid ongoing category declines.

The company may see an improvement in Q4 scanner trends sequentially to around flat, with likely "solid growth" in household cleaning and garden control products, RBC said.

However, Spectrum previously paused imports on some products due to tariffs for about eight weeks, which led to shortages in some core items. Although supply has resumed, management expects unfilled orders in some areas to continue into the quarter, according to the note.

Spectrum has tried to use pricing and supplier concessions to protect its bottom-line from tariff impacts, RBC said. "We remain wary of companies that have taken this approach given already strained consumer spending, particularly in those with greater exposure to discretionary categories," the note added.

RBC has an outperform rating and a $75 price target on Spectrum.

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