Citi reiterates Buy rating on Sonoco Products stock ahead of earnings

Investing.com - Citi has reiterated its Buy rating and $56.00 price target on Sonoco Products (NYSE:SON) ahead of the company’s second-quarter earnings report scheduled for Wednesday after market close. According to InvestingPro data, analysts’ price targets range from $48 to $65, with the stock currently trading below its Fair Value. The company has demonstrated remarkable dividend consistency, having raised its dividend for 42 consecutive years.

The investment bank expects Sonoco to maintain its key 2025 guidance metrics, including EBITDA of $1.30-$1.40 billion against consensus of $1.33 billion, EPS of $6.00-$6.20 versus consensus of $6.00, and operating cash flow of $800-$900 million. InvestingPro analysis shows the company maintains a "Fair" overall financial health score, with particularly strong profitability metrics.

Citi projects that potentially softer volume in Industrial Paper and Rigid Paper Cans could be offset by productivity benefits, price realization in URB in the second half of the year, and modest foreign exchange benefits.

The company had previously guided for low-single-digit percentage organic volume growth in its Consumer segment, driven by new business wins in aerosol and expansion of four paper cans facilities in the United States, outperforming ongoing softer demand for food and beverages.

Sonoco shares are currently trading at approximately 7.2 times next-twelve-months EBITDA when adjusting net debt for the already completed sale of TFP, down from the 8.7 times average over the last 10 years, according to Citi’s analysis.

In other recent news, Sonoco Products Company reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $1.38, which fell short of the forecasted $1.42. The company’s revenue also missed expectations, coming in at $1.7 billion compared to the anticipated $2.02 billion. Despite these misses, Sonoco demonstrated significant growth in net sales and adjusted EBITDA, with net sales increasing by 31% and adjusted EBITDA rising by 38% to $338 million. UBS analysts initiated coverage on Sonoco with a Neutral rating and a $48 price target, noting potential growth challenges in the European food can business. Additionally, Sonoco announced a $30 million investment to expand its adhesives and sealants production capacity, adding 100 million units of annual capacity. The company also named Paul Joachimczyk as the new Chief Financial Officer, effective June 30, 2025, succeeding Interim CFO Jerry Cheatham. These developments reflect Sonoco’s ongoing strategic initiatives and operational adjustments amid market challenges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.