Sherwin-Williams (NYSE:SHW) Gets a Fresh Coat of Analyst Love

We've seen a lot of great things out of Sherwin-Williams (NYSE:SHW) before, and we're starting to see a fresh crop of great things emerge. One of the few true coronavirus winners, thanks to a whole lot of people who stayed home and decided they wanted home to look like somewhere they'd never really been before, the company has made a lot of headway since. Now, a host of analysts are emerging to throw backing behind the paint and specialty chemical shop, and have put a slew of recommendations into the mix.

A Vibrant Future, Say Analysts

It's hard to pass on a stock that comes so heavily recommended, and right now, Sherwin-Williams has a whole lot of analysts stepping in to recommend it, some for the first time.

One of the latest analyst recommendations for Sherwin-Williams comes from KeyCorp, who started coverage on the stock just Thursday. KeyCorp put an “overweight” rating on the stock and put a price target of $805 on it. Given that the stock closed yesterday at $702, that's a significant advance and a substantial upside potential.

That's just for starters; our own research finds that there is currently a consensus rating of “buy” on the stock so far, with 27 brokerages offering analysis on Sherwin-Williams. Of these 27, just one has a “sell” recommendation, while 10 have a “hold”, 13 have a “buy” and two have it rated at “strong-buy” levels.

Some Believe More Vibrant Than Others

Things get interesting when you start considering price targets. Right now, the average price target sits at $654.64, which is actually quite a bit under the last closing price. Even here, we're seeing quite a bit of divergence. For instance, Royal Bank of Canada pushed its price target up from $655 to $700, which is still just a bit under its last closing price. Deutsche Bank also gave it a $700 price target, but only raised it from $675. Loop Capital's target now stands at $695, up from its previous $625.  As mentioned previously, KeyCorp put an $805 target down, which is helping to slant the average price upward.

Weighing down the average, meanwhile, is companies like JPMorgan Chase & Co., who raised its price target to a fairly conservative $637, up from its much more conservative previous assessment of $555.

The Response Has Been Staggering

The response so far from investors has been sharp. Not only has the stock actually recovered from its March lows—where virtually everybody had their lows this year—but the stock is trading above what it was before the coronavirus even became a thing.

Hedge funds have been piling into Sherwin-Williams for some time now as well, our research found. Viking Global Investors, for example, stepped in to pick up a position worth nearly $230 million by itself, and Capital Research Global Investors expanded its stake nearly 71% of its previous levels. And even as JPMorgan Chase & Co had one of the lower opinions of Sherwin-Williams, it still wasn't a low enough opinion to keep the company from picking up an extra 248,727 shares in the second quarter.

The Allure of a Fresh Coat of Paint

One of the biggest reasons that so many firms seem to be adding Sherwin-Williams to their portfolios is the same reason people keep adding Sherwin-Williams' paint offerings to their shopping carts: the value of a fresh coat of paint is hard to disparage. That's especially true in a pandemic, and while the pandemic has visibly retracted, it's not gone. This means people will opt to stay home on at least some occasions when they might have gone out otherwise, and that means improving home spaces will remain valuable.

Not everyone who was going to upgrade their homes has done so already. There will be plenty of people buying paint and renovating with fall—while they can still open a window to let out the fumes—and even some with winter. Just three weeks ago, it was revealed that there was a surge in July housing starts in the US, which means more paint will be put to work as those housing starts from July become completed living spaces.

With work-from-home a part of life for the foreseeable future, and stay-at-home likely a go-to option for a while as well, that fresh coat of paint will feel a lot more welcoming and give Sherwin-Williams a leg up in the market.