BofA downgrades Ball, Greif, O I Glass and Silgan as packaging outlook cools

Investing.com -- Bank of America has a cyclical stance on U.S. packaging and forest‑products stocks, downgrading major companies to Neutral, but added that these names offer “torque” if the economy strengthens.

The brokerage downgraded Ball Corp, Greif (NYSE:GEF), O‑I Glass and Silgan Holdings (NYSE:SLGN) after the shares approached its price objectives and as it sees earnings momentum slowing into 2026.

“Ball and OI seem exposed in our view to weak alcohol trends and destocking,” the note said, adding that Greif faces dilution from the sale of containerboard assets and that Silgan’s investment case is now widely understood.

Though Bank of America reiterated Buy ratings on Avery Dennison, Graphic Packaging (NYSE:GPK), Sealed Air (NYSE:SEE) and Sonoco, arguing the quartet screens cheaply against depressed growth expectations and could benefit from a pick‑up in activity.

The analysts see “asymmetric upside potential” if forecasts turn more positive, especially as Avery rides better sentiment in apparel and RFID, and Sealed Air and Sonoco move past self‑inflicted headwinds.

For the sector, the brokerage expects second‑quarter EBITDA to rise 6 per cent year‑on‑year, but sees earnings per share falling 14 per cent as higher interest costs and softer pricing pinch the paper and forest segment, where it projects a 36 per cent EPS slide.

Packaging (NYSE:PKG) businesses are forecast to show 8 per cent EPS growth and roughly 1 per cent volume gains.

Bank of America’s strategists expect the U.S. economy to “progress as trade deals are concluded,” with interest rates and inflation remaining elevated and the dollar steady or stronger.

Against that backdrop, brokerage moving away from defensive packaging names and toward stocks with operating leverage, saying defensiveness and “easy compares” are unlikely to drive performance if conditions improve.

Packaging shares are down 4 per cent in absolute terms and 10 per cent relative to the market this year through July 7, the note said, with paper and forest names lagging by 18 per cent.