UPDATE: Barclays Downgrades Bemis Company to UW from EW Following Valuation Not Supported By Growth Trajectory, Drops PT to $36.00

In a report published Wednesday, Barclays analyst Scott Gaffner downgraded Bemis Company, Inc.

to Underweight from Equal-weight, dropping its price target to $36.00, following valuation not supported by growth trajectory. According to the report, Above-average valuation combined with below-average earnings growth trajectory lead analysts to downgrade BMS to UW from EW: BMS trades at a 2x premium to the packaging industry and roughly one turn higher than its historical average despite below-average prospects for EPS growth. “EPS grew only 6% from 2010 to 2013 versus packaging peer growth of 26%, and we forecast an EPS CAGR of 8% for BMS from 2014 to 2016, versus a 13% increase for the industry,” the report noted. “Limited earnings growth is supported by our belief that BMS will post below-average organic growth combined with the prospect of limited margin gains going forward. We reduce our 2014 EPS estimate to $2.40, and PT to $36 representing 10% downside from current levels.” BMS closed Tuesday at $38.86 with shares trading down at 2.73 percent.