Global Courant
Sealed Air could see an earnings rebound, Citi says. Analyst Anthony Pettinari upgraded the packaging company to neutral. He set a price target of $41, implying a 30.5% rally from Friday’s closing price. “Sentiment on SEE (and the broader packaging space) has been very negative given share price weakness, continued full challenges and downward earnings revisions,” Pettinari said in a note on Monday. “We see the third quarter results as a potential catalyst, with benefits from cost savings and repeat volume prospects after a sharply lowered bar in the second quarter.” Sealed Air shares are down about 37% this year as the company navigates a lower growth environment following the Covid-19 crisis. In this quarter alone, the stock is down more than 21% as weakness in end markets led to a second-quarter revenue shortfall and lower earnings and revenue expectations. Citi noted that the company’s earnings growth will be driven by cost savings from the three-year CTO2Grow program, which is expected to deliver between $140 million and $160 million in annualized cost savings by the end of 2025. Sealed Air’s management can still look forward to more aggressive measures. moves to improve the company’s share price after poor stock performance and underlying headwinds, the analyst noted. “We see significant benefits versus initial targets based on SEE’s track record of cost savings under CEO Ted Doheny,” said Pettinari. However, he added that “with poor investor sentiment and prolonged share price weakness, we believe the call for packaging management teams to take more dramatic actions (asset sales, sharper cost cuts, exploration of M&A/go-private options) could lead to possible loudness.” — CNBC’s Michael Bloom contributed to this report.
