Newell Brands (NWL) faces a tough Q4 setup, with weak consumer demand, tariff-related margin pressure and international headwinds weighing on results, RBC Capital Markets said in a Wednesday note.

US sales trends show modest improvement but visibility remains limited, particularly among younger consumers and in general merchandise categories.

Scanner data for Q4 showed improvement in key US channels, supported by steadier pricing and modest volume growth in baby care, household storage and general merchandise. However, underlying trends over the past two years showed only slight improvement.

The brokerage highlighted mixed peer signals, citing softer guidance from Helen of Troy (HELE) and uneven Whirlpool (WHR) results as evidence of continued caution among lower- and middle-income consumers.

Gross margins in Q4 are expected to contract modestly, while Tariffs and higher advertising and promotion spending continue to weigh on results. Sales for the quarter in Brazil and Argentina are tracking roughly 10% below the prior year, according to the note.

RBC is cautious on fiscal 2026 and said that profitability and margins may require more investment than expected.

The firm maintained its sector perform rating on the stock with a price target of $4.50.

Shares of Newell Brands rose nearly 3% in recent trading.

Price: 4.53, Change: +0.13, Percent Change: +2.84