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On Monday, UBS analyst Joshua Spector upgraded Sealed Air Corporation (NYSE:SEE) stock from Neutral to Buy, setting a price target of $38.00. Spector cited the stock’s significant decline in value since mid-January as an opportune moment for investors to purchase shares. Trading near its 52-week low of $24.35, the stock has declined 30% year-to-date. InvestingPro analysis suggests the stock is currently undervalued, with multiple indicators including RSI pointing to oversold territory.
Sealed Air has experienced difficulties within its Protective business over the past few years. Management anticipates a positive shift in volumes during the second half of the year. While UBS maintains a cautious stance, expecting low single-digit percentage declines in Protective volume to persist into the latter half of the year, they acknowledge the company’s cost-saving targets.
The company has outlined $90 million in cost reductions aimed for completion by 2025. Management has also indicated a willingness to take further measures if volume expectations are not met. UBS has slightly reduced its 2025 EBITDA estimates by approximately 3%, which sits 3% below the consensus. However, the firm believes that Sealed Air can achieve its EBITDA guidance for 2025.
Spector highlighted that the current market pricing seems to reflect an EBITDA approximately 20% below the consensus, which may undervalue Sealed Air’s stock. UBS suggests that the 5:1 upside to downside ratio presents an attractive risk-reward scenario for investors. The firm anticipates that cost savings and a potential reduction in negative foreign exchange impacts could partially mitigate any volume shortfalls.
Furthermore, Sealed Air has been actively repositioning its Protective segment. UBS believes that this repositioning introduces additional opportunities that are not currently reflected in the stock’s price. This strategic shift could provide Sealed Air with more flexibility and potential growth avenues moving forward.
In other recent news, Sealed Air Corporation reported its fourth-quarter earnings for 2024, with adjusted earnings per share (EPS) surpassing analysts’ expectations at $0.75, compared to the forecasted $0.68. Revenue for the quarter aligned with projections at $1.37 billion. Truist Securities reiterated its Buy rating for Sealed Air, maintaining a price target of $44.00, following investor meetings and discussions on the company’s progress in its Protective and Food divisions. Meanwhile, Jefferies adjusted its price target for Sealed Air to $36.00 from $38.00, maintaining a Hold rating, noting the company’s strategic initiatives and reorganization efforts.
Sealed Air announced that its Senior Vice President and Chief Operating Officer, Emile Chammas, will depart on April 1, 2025, as part of a mutual agreement. This executive change aligns with the company’s continued focus on strategic direction and operational improvements. Truist Securities updated its financial model for Sealed Air, maintaining EPS and EBITDA estimates but slightly reducing free cash flow projections for 2026 and 2027. These developments reflect Sealed Air’s ongoing efforts to enhance its operational efficiency and growth prospects in the coming years.
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