Investing.com -- Mizuho upgraded Stanley Black & Decker Inc (NYSE:SWK) to "outperform" from "neutral" on improving execution, valuation and a bottoming tools market heading into 2025.
The brokerage raised its price target to $110. Mizuho (NYSE:MFG) noted SWK trades at a 20% discount to building products peers and 40% below electrical equipment/manufacturing stocks.
Stanley Black & Decker shares have lagged significantly, down 15% this year, compared to a 32% gain in electrical equipment/manufacturing stocks and an 11% rise in tools peers. Even big-box retailers, which account for 30% of the company's revenue, have risen 18%.
Mizuho sees potential for mean reversion as tools revenue, down 20% from 2021 peaks, returns to growth. "Underlying rev are down 20% from peak and now back to trend with the bottom in, or very near across entire tools complex," the note said.
Stanley has beaten earnings expectations for two consecutive years following a major profit reset in early 2023. The company has reduced inventories and shown resilience in its professional business, while do it yourself consumer trends hint at stabilization, the note added.
Tariff-related headwinds, previously estimated at $200 million pre-tax, are now largely addressed, requiring only minimal price adjustments for offset.
With a 4% dividend yield and long-term targets that underpin its valuation, Mizuho called SWK on of a top pick among electrical equipment/manufacturing stocks.