Spectrum Brands (SPB) is well-positioned for long-term growth, despite significant near-term challenges due to overall market softness, RBC Capital said in a note Friday.
The firm noted that Spectrum's Global Pet Care business swung to organic sales growth of 5.8% in Q1, beating the Street estimate of 3.3%, with key companion animal brands outperforming the category.
The company's "fewer, bigger, better" strategy focuses on high-return investments, innovation and brand activation, which will generate disproportionate sales and market-share gains, RBC said.
The firm also noted that Spectrum Brands has expanded its distribution network for fiscal year 2025 launches, which will accelerate the Pet business in H2 due to better retail penetration.
The company's home and garden business is seeing positive trends and strong innovation, RBC said, adding that management is optimistic about the upcoming season, expects normal weather patterns, and has confirmed distribution gains for Q2 and beyond.
RBC maintained its outperform rating on the stock and raised its price target to $85 from $75.
Price: 75.40, Change: -0.10, Percent Change: -0.13
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