New Steel Tariffs Give Whirlpool A Competitive Edge, Says Analyst

Bank of America Securities upgraded Whirlpool (WHR) to Neutral with a price target increase to $94, citing tariff-related tailwinds and improved North American margin prospects. The analyst anticipates that new Section 232 tariffs, imposing a 50% duty on steel content in imported appliances, will disproportionately benefit Whirlpool due to its domestic production base, potentially forcing competitors to raise prices and allowing Whirlpool to expand margins by 150-200 basis points; WHR shares are up 5.12% to $92.04 following the upgrade.

Analysis

Whirlpool Corporation (WHR) has received an upgraded rating to Neutral from Underperform by Bank of America Securities, with the price target significantly increased to $94 from $68. This revision is primarily attributed to improved North American margin prospects and substantial tailwinds anticipated from new import tariffs. Effective June 23, new Section 232 tariffs will impose a 50% duty on the steel content of imported home appliances, a development that positions Whirlpool advantageously due to its operational structure: 80% of its U.S. sales are domestically produced, and 96% of its steel is U.S.-sourced, thereby minimizing its direct exposure. This contrasts sharply with competitors who rely on imports for over half of their U.S. sales and previously bypassed steel tariffs through finished goods imports; this advantage is now expected to diminish. The analyst, Rafe Jadrosich, projects these tariffs could compel competitors to increase wholesale appliance prices by 3–5% (approximately $15–$20 per unit). For Whirlpool, which currently realizes less than a 7% margin on a typical sub-$500 wholesale appliance, such a price adjustment by competitors could enable it to expand EBIT margins by 150–200 basis points and potentially increase profits by 20–30% if this price lift is realized on half its North American volume. Consequently, Bank of America Securities has raised Whirlpool's EPS estimates to $8.56 for 2025 (from $8.35), $10.33 for 2026 (from $9.39), and $10.73 for 2027 (from $9.96). While long-term concerns persist regarding free cash flow sufficiency for deleveraging and sustaining the $400 million annual dividend, recent debt refinancing and the anticipated sale of its India business in the second half of 2025 are seen as providing adequate financial support through the company’s 2026 debt maturity. The market has reacted positively, with WHR shares trading 5.12% higher at $92.04 following the news.

Key Decisions for Investors

• Investors should assess Whirlpool's potential for significant margin expansion and market share gains driven by the new Section 232 steel tariffs, which are poised to reshape the competitive dynamics in the North American appliance sector.
• Closely monitor competitor pricing responses after the June 23 tariff implementation and Whirlpool's ability to effectively capitalize on its domestic manufacturing footprint to achieve the forecasted EPS growth for 2025-2027.
• Despite the analyst upgrade to Neutral and the positive tariff outlook, it is prudent to weigh these near-term catalysts against persistent long-term concerns regarding free cash flow generation, deleveraging progress, and dividend sustainability, particularly considering the stock's recent appreciation towards the new $94 price target.