UBS reiterates buy rating on Sealed Air stock amid cost-cutting focus

UBS maintained its buy rating and $39.00 price target on Sealed Air (NYSE: NYSE:SEE) Tuesday. According to InvestingPro analysis, the company appears slightly undervalued at its current market capitalization of $4.59 billion, with a strong free cash flow yield supporting the investment thesis. The investment firm cited the packaging company’s renewed focus on cost reduction opportunities across its Food and Protective business segments under its newer executive leadership team.

The restructuring into discrete divisions with separate presidents and operational structures has improved visibility on potential cost savings and created clearer connections between investments and growth, according to UBS. With current annual revenue of $5.3 billion and a healthy gross margin of 30.29%, the firm noted that Sealed Air is well-positioned to handle near-term demand uncertainty while beginning to move past challenges from the previous year, including specific customer losses in its Protective segment. For deeper insights into Sealed Air’s financial metrics and growth potential, InvestingPro offers comprehensive analysis with 6 additional ProTips.

Sealed Air has reported improved customer retention rates following targeted efforts in this area. The company is now shifting focus toward increasing customer and product wins through research and development programs in paper, materials, and automation technologies to drive future growth.

UBS identified the U.S. beef cycle as an emerging headwind for Sealed Air’s Food segment but indicated that trends across the rest of the company’s business lines remain largely on track. The firm expects volumes to remain soft through 2025, with improving comparisons anticipated in the second half of the year.

The investment bank projects that much of Sealed Air’s EBITDA growth, currently at $1.04 billion, will be driven by its $90 million cost savings program rather than volume increases in the near term. This cost reduction initiative represents a key element of the company’s strategy to improve financial performance despite challenging market conditions. InvestingPro data shows the company maintains a "GOOD" Financial Health Score and has consistently paid dividends for 20 consecutive years, demonstrating long-term financial stability.

In other recent news, Sealed Air Corporation reported its first-quarter 2025 earnings, which exceeded expectations with an adjusted EPS of $0.81, surpassing the forecast of $0.67. The company’s revenue met expectations at $1.27 billion, despite a slight decline compared to the previous year. Additionally, Jefferies raised Sealed Air’s price target from $29.00 to $34.00 while maintaining a Hold rating, reflecting a more optimistic outlook on the company’s financial health and market potential. The analyst noted improvements in Sealed Air’s Protective division and the robustness of its Food business, which has achieved market share gains in the bag sector and expanded internationally.

Furthermore, Sealed Air held its 2025 Annual Meeting of Stockholders, where all director nominees were elected, and PricewaterhouseCoopers LLP was ratified as the independent auditor for the fiscal year ending December 31, 2025. The company’s executive compensation was also approved by stockholders. These developments are expected to influence Sealed Air’s governance and strategic direction in the coming year.

Sealed Air’s performance in the Food segment showed organic growth, while the Protective segment faced an 8% decline. Despite challenges, the company reaffirmed its full-year 2025 outlook, anticipating modest volume softness in both segments. Investors will closely watch Sealed Air’s progress, especially regarding volume trends in the Protective segment and the continued expansion of the Food business.

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