BofA Securities Reiterates Buy Rating on Sealed Air (SEE)

BofA Securities analyst George Staphos reiterated a Buy rating and $39.00 price target on Sealed Air (NYSE: SEE)

The analyst comments "Our team recently had the opportunity to host one of our long-time industry contacts on a cattle-cycle call, Mr. Steve Kay, editor and publisher of Cattle Buyers Weekly. See our separate team note. Despite concerns to the contrary in recent quarters, our take on Mr. Kay’s commentary is that packaging will continue to favor existing structures (i.e., polyvinylidene chloride [PVDC]) due to economics and shelf-life considerations, a positive for incumbents like SEE. Meantime, while retail beef prices remain high, demand for beef is likely to increase modestly in 2025 — consumers seemingly are not trading down despite inflation. Meantime, cattle supplies will remain tight and that’s certainly not great news, but herd size could begin to grow modestly in 2025 or 2026. It will take ~2.5 years for cattle on feed (COF) to begin growing (this is the population of animals to be ultimately slaughtered) and COF will be lower in 2026, but near-term beef production will be fairly constant because carcass weights are growing as the existing population is kept on feed longer. Meantime in protective packaging, while related sectors like the corrugated box market remain sluggish (i.e., our last BofA Box Survey was weaker) commentary from Fastmarkets this past weekend was not terrible. And our last Boxmaker Roundtable suggested volume trends should be flat-to-improving in 2H. Moreover, SEE trades at an ~8x EBITDA multiple versus, say, the ~10x multiple for Buyrated Packaging Corp (PKG) and ~9x multiple for Neutral-rated International Paper (IP)."

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 $31.23 yesterday.

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