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On Wednesday, Stifel analysts adjusted their outlook for Reynolds Consumer Products Inc . (NASDAQ: NASDAQ:REYN), reducing the price target to $31 from the previous $32 while keeping a Hold rating on the stock. Currently trading at $26.63, Reynolds shows signs of being slightly undervalued according to InvestingPro analysis, with a P/E ratio of 15.3x and an attractive 3.31% dividend yield. The revision follows Reynolds’ guidance for 2025, which projects a low-single-digit decline in sales, despite retail volume expected to meet or exceed the category’s performance.
The company’s fourth-quarter results for 2024 were solid, but the 2025 sales and adjusted EBITDA forecasts led to a slight decrease in the price target. Stifel’s new target is based on an 11x multiple of the estimated 2026 adjusted EBITDA. The analysts believe that at the current level, there is more potential for upside than downside for Reynolds’ shares, a view supported by the company’s strong financial health score of GOOD on InvestingPro, with liquid assets exceeding short-term obligations as evidenced by a healthy current ratio of 2.03.
Reynolds has announced a strategic update aimed at accelerating sales growth through distribution gains and innovation. The company plans to selectively increase investment in activities with high returns, which is expected to provide flexibility in earnings over time. This strategy is projected to lead to more consistent growth in sales and adjusted EBITDA, aligning with the company’s long-term targets of 2% and 4% compound annual growth rates (CAGRs) from 2024 to 2030, respectively.
The guidance provided by Reynolds includes an anticipation of improved trends after the first quarter of 2025. The benefits of the updated strategy are expected to become more evident in the second half of the year. The updated strategy and anticipated growth are part of the company’s efforts to meet its long-term financial targets.
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