Wells Fargo downgrades O-I Glass on mixed outlook for packaging sector in Q2

Published 18/07/2025, 15:34
© Reuters.

Investing.com -- Wells Fargo downgraded OI-Glass to Equal Weight ahead of second-quarter earnings, citing excess capacity in Europe, weak North American volumes, and lingering tariff risks despite recent profit improvement under new leadership.

The broker said sector results are expected to come in largely in line with conservative expectations, with foreign exchange providing a lift for companies with international exposure.

"With excess capacity in Europe, persistently weak NA vols and tariff risk, we are comfortable moving to the sidelines," analysts at Wells Fargo (NYSE:WFC) said. 

Beverage can makers such as Ball (NYSE:BALL), Crown Holdings (NYSE:CCK), and Ardagh Metal Packaging (NYSE:PKG) are seen as likely outperformers, buoyed by strong promotional activity and potentially poised to raise guidance.

However, Wells Fargo warned that consumer "value-seeking behavior,” including trading down to lower-cost goods and buying in bulk—continues to pressure volumes, particularly for companies like Graphic Packaging (NYSE:GPK), which it flagged as at risk for a guidance cut.

The firm raised estimates across several names in the group, driven in part by a weaker U.S. dollar during the quarter.

It expects a more optimistic tone from managements compared with the previous quarter, though still tempered by caution around tariffs and inventory discipline from consumer goods companies and retailers.

Despite O-I outperforming peers year-to-date, Wells Fargo said it prefers to step back given the macro uncertainties and limited near-term catalysts.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.