Greif stock target raised to $72 by Truist Securities

Monday - Truist Securities analyst Michael Rozland increased the price target on Greif Inc. (NYSE:GEF) to $72.00 from the previous $56.00, maintaining a Hold rating on the stock. Rozland’s decision follows Greif’s reported second-quarter Class A operating earnings per share (EPS) of $1.19, which surpassed both Truist Securities’ forecast of $1.05 and the Street’s expectation of $1.09. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, with analyst targets ranging from $68 to $93.

Greif’s performance in its Customized Polymer Solutions and Integrated Solutions sectors exceeded projections, while its Durable Metal Solutions and Sustainable Fiber Solutions sectors performed largely as expected. The company’s ongoing Soterra timberland sales process is also progressing favorably, and Rozland notes that Greif may consider selling additional assets at the right price. The company, with a market capitalization of $3.12 billion and trailing twelve-month revenue of $5.52 billion, has demonstrated solid operational execution with an EBITDA of $755.3 million.

In light of the company’s robust cost management and updated guidance, Greif’s shares saw a significant rise of approximately 15.6%, in stark contrast to the S&P 500, which experienced a decline of around 0.5%. The positive financial results and management’s forward-looking statements have led to an increase in Truist Securities’ EPS estimates for the coming years. The firm’s forecast for fiscal year 2025 is now set at $3.75, up from $3.65, with projections for 2026 and 2027 increased to $4.90 and $5.45, respectively, from previous estimates of $4.80 and $5.35.

The revised price target of $72 reflects Truist Securities’ confidence in Greif’s continued strong execution, improved EBITDA, and earnings, as well as the company’s ability to command higher multiples in the market. Trading at a P/E ratio of 14.81x, the company has maintained dividend payments for 53 consecutive years, demonstrating strong financial stability and shareholder commitment.

In other recent news, Greif Inc. reported its second-quarter fiscal 2025 earnings, revealing an adjusted earnings per share (EPS) of $1.22, surpassing analysts’ expectations of $1.12. Although revenue slightly missed projections, coming in at $1.39 billion compared to the forecasted $1.42 billion, the company raised its fiscal 2025 guidance for adjusted EBITDA to at least $725 million. Truist Securities responded by increasing Greif’s stock price target from $56 to $72, maintaining a Hold rating. The company’s divisions, particularly Customized Polymer Solutions and Integrated Solutions, outperformed expectations, while others met projections.

Greif has updated its low-end fiscal 2025 EBITDA guidance to approximately $725 million, reflecting better-than-expected price cost performance and lower volumes across various divisions. The company also raised its low-end free cash flow guidance to about $280 million, attributed to improved EBITDA guidance and favorable cash tax and other costs. CEO Ole Rosgaard emphasized the success of the company’s strategy, highlighting margin expansion and strong free cash flow even amidst macroeconomic challenges. CFO Larry Hilsheimer noted that the sale of the Soterra timberland business is progressing well, with proceeds expected to reduce debt.

Despite challenges in North American markets, Greif’s Polymer and Fiber Solutions segments showed growth, and the company continues to focus on strategic cost optimizations. Analysts have noted potential risks from weak demand in North American markets and uncertainties regarding tariffs and steel price fluctuations. However, Greif remains optimistic, aiming to achieve $1 billion in EBITDA and $500 million in free cash flow by 2027.

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