UPDATE: UBS Starts Sealed Air (SEE) at Buy

August 23, 2016 6:52 AM EDT
Get Alerts SEE Hot Sheet
Price: $48.25 +0.46%

Rating Summary:
    9 Buy, 6 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 11
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(Updated - August 23, 2016 7:52 AM EDT)

UBS initiated coverage on Sealed Air (NYSE: SEE) with a Buy rating and a price target of $54. Analyst Edlain Rodriguez sees company as an industry leader and he highlighted favorable secular and cyclical top-line trends.

"SEE is the leading player in plastics packaging (a premium player to DuPont and Dow), and the closest player to Ecolab in cleaning & sanitizing chemicals. The CEO was a senior executive at Dow for 35 years and since he took office in 2013 SEE has been on a transformative journey. Despite current concerns about the pace of growth (which should accelerate in 2H) and back-end loaded guidance, we believe SEE is well-positioned to grow organic sales 4% and achieve EBITDA margin of 18%+ by 2018 (vs 16.7% in 2015) due to its razor-and-blade business model that results in a high level of recurring consumables," said Rodriguez.

The analyst added, "Factors driving our forecast for top-line growth include significant exposure to an upcoming cyclical recovery in the US beef market, secular growth trends in e-commerce packaging as well as cleaning solutions for increasing health standards. About 15% of total sales is exposed to fresh red meat, which is leveraged to the beef cycle. Nearly 7% of sales is to e-commerce and related third-party logistics (3PLs). With its addressable markets growing at 2-4%, we expect SEE to outpace the market given its #1 or #2 market positions, new product introductions, and history of innovation."

For an analyst ratings summary and ratings history on Sealed Air click here. For more ratings news on Sealed Air click here.

Shares of Sealed Air closed at $46.88 yesterday.

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