Stanley Black & Decker (SWK) embarked on a growth strategy of shifting its business portfolio towards favored growth markets through acquisitions like BDK and divestitures, which helps in expanding its global business platform.
However, a huge dependence on the housing industry may have a considerable unfavorable impact on sales, earnings and cash flows. Nevertheless, the diversified customer base, new product launches, innovative techniques and strict cost control are reasons for Stanley to bank on higher revenues.
Thus, we upgrade our recommendation from Neutral to Outperform. We expect the stock to trade at a P/E of 23.5x, to arrive at the target price of $76.00.Zacks Investment Research
