UPDATE: Barclays Downgrades Sonoco Products (SON) to Underweight

(Updated - December 7, 2015 12:06 PM EST)

Barclays downgraded Sonoco Products (NYSE: SON) from Equalweight to Underweight with a price target of $38.00 (from $41.00). The firm said the long-term strategy is sound but near-term is challenged.

Analyst Scott Gaffner said 2016 is likely to be challenged due to the company's relatively high exposure to industrial end markets: Management continues to migrate its portfolio towards consumer end markets such as plastic packaging, protective solutions, and international composite cans, but the 2016 guidance provided at the company's analyst day looks aggressive to us given the currently high industrial exposure.

The analyst said the recent strength in the stock is likely due to perception of safety and high dividend yield, but their research suggest earnings are more cyclical. "SON NTM EPS estimates have shown a high correlation to industrial production, and with our view that the industrial economy has yet to find a bottom, we believe near-term estimates could continue to come down. At the same time, SON earnings have historically exhibited relatively high cyclicality due to its fixed asset base which could magnify and shift lower in the volume outlook as productivity measures will be more difficult to achieve."

The analyst said if invetors are looking for a place to hide in the current environment, we prefer Crown Holdings (NYSE: CCK)

Potential M&A represents the biggest risk to their call, but valuation multiples could keep management from making large transformative deals.

For an analyst ratings summary and ratings history on Sonoco Products click here. For more ratings news on Sonoco Products click here.

Shares of Sonoco Products closed at $42.93 yesterday.

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