Wells Fargo boosts Sherwin-Williams rating amid tariff resilience

On April 30, 2025, Wells Fargo announced an upgrade of Sherwin-Williams, a paint and coatings manufacturer, to an overweight rating from its previous equal weight rating. This decision comes as Wells Fargo analyst Michael Sison determined that Sherwin-Williams demonstrates resilience against potential tariff impacts, given that 80% of its revenue is generated in the United States. While tariff impacts on raw materials are acknowledged, the company largely sources these materials from manufacturing regions, minimizing their potential effect. Sison noted that Sherwin-Williams has shown exceptional execution and continues to achieve earnings growth, which has subsequently impressed investors despite the challenging macroeconomic environment. The company's strong pricing strategy has consistently improved its paint store margin growth, which is crucial for maintaining competitive advantage in the market. The analyst highlighted that the company has made significant share gains, secured new accounts, and improved efficiency and cost management across its segments. This focus on operational excellence is positioning Sherwin-Williams as a primary entity to benefit from the anticipated recovery in the housing sector. Additionally, the company revealed its intention to acquire a Brazilian decorative paints business from BASF for $1.15 billion in cash, with the transaction expected to close in the latter half of the year. In summary, Wells Fargo's positive outlook on Sherwin-Williams not only reflects the company's solid fundamental backdrop but also emphasizes its ability to navigate the complexities associated with tariffs and raw material costs. The upgrade indicates confidence in Sherwin-Williams' capacity to outperform market expectations amidst prevailing economic conditions, suggesting that it is well-positioned for future growth.