05 Apr UBS says this little-known food packaging stock can rally nearly 30%
Now is the time to buy shares of Sealed Air , according to UBS. Analyst Joshua Spector upgraded shares to buy from neutral. He maintained his price target of $59 per share, suggesting a 28.8% rally for the stock from Tuesday’s close price. “SEE’s end markets of Food packaging and Protective packaging are the beneficiaries of the secular trends of global protein consumption and e-commerce/mobile, respectively,” Spector said, noting that demand volumes should become positive in the third quarter this year. “We believe the market for vacuum sealed plastics packaging for fresh meat could grow ~2% over the long-term driven by global population growth, increasing per capita meat consumption in emerging [markets], and increased use of plastic packaging on fresh meats to extend shelf life,” he added. UBS thinks that Sealed Air’s recent stock weakness is overdone. Shares have tumbled 30% during the past 12 months, as the company struggled with supply chain issues, a post-pandemic demand reset and industrial destocking. SEE 1Y mountain Sealed Air Corp shares have tumbled during the last 12 months “We expect volumes to inflect positive[ly] starting in 3Q23,” Spector said. “This should restore confidence in the SEE growth algorithm, and we model a long-term ~13% EPS [compound annual growth rate], which makes the stock undeserving of the current valuation discount, in our view.” To be sure, not everyone is as bullish on the stock. Roughly three-fifths of analysts covering Sealed Air rate it a hold, Refinitiv data shows. The average price target on shares, however, implies 24.5% upside over the next 12 months. —CNBC’s Michael Bloom contributed to this report.