KeyBanc Initiates Coverage on BWAY Holding (BWY) with a Hold; Significant Opportunity, But Near-Term Concerns

November 24, 2009 4:19 PM EST

KeyBanc initiates coverage on BWAY Holding Company (NYSE: BWY) with a Hold.

KeyBanc analyst says, "We are establishing estimates of $0.38 for 4Q09, $1.26 for FY09 and $1.60 for FY10. We believe BWY has an attractive franchise position in the general line metal container market and an opportunity to achieve a similar stance over the next several years in the plastic segment through industry consolidation and leveraging its existing customer base and national footprint. In recent quarters, BWY has accumulated significant momentum through raw material-inventory management, cost reductions and, more recently, its acquisitions of Central Can and Ball Corporation's (NYSE: BLL) plastic pail business. There is some additional benefit to be harvested from cost reduction initiatives in 2010, which we have incorporated into our estimate. We believe upside from organic initiatives and stable to modestly improving volumes in 2010 are currently reflected in shares. In our view, further upside will be dependent primarily on acquisition synergies that can be achieved."

"We believe there is a significant opportunity over the next few years, but near-term concerns include: 1) the transfer of ownership from Kelso & Company, L.P.; 2) pass through of tinplate at January 1, 2010; and 3) little visibility into 2010 volumes. Although there is some modest room for multiple appreciation, we believe valuation is reasonable relative to peers, and with the aforementioned near-term headwinds, we believe there is only modest upside to shares in the near term; hence, our HOLD rating."

To see all the upgrades/downgrades on shares of BMY, visit our Analyst Ratings page.

Bristol-Myers Squibb Company (BMS) engages in the discovery, development, licensing, manufacture, marketing, distribution, and sale of pharmaceuticals and nutritional products worldwide.

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