Bank of America Merrill Lynch issues a forecast on major appliance volume just ahead of Whirlpool's (WHR +0.8%) earnings report and guidance update tomorrow.
"We expect another year of modest declines (-1% in the US) as a fading tailwind from housing and pent-up demand will unlikely be able to fully offset declining replacement demand," write analyst Curts Nagle and team.
"We estimate that replacement drives roughly 50% of appliance sales, while housing, discretionary purchases and pent-up demand comprise the rest. Our model assumes negative 4ppt of growth from replacement and positive 2.5ppt from housing and residual pent-up demand. We believe replacement will continue to be a headwind over the next few years as we continue to cycle appliances produced during the housing downturn and the Great Recession."
Whirlpool's North America appliance sales are expected to slightly trail the industry average in 2019.
BAML has a Neutral rating on Whirlpool and price objective of $131 into the report. Shares of Whirlpool are up 18% over the last six weeks.
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