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The Strong Dollar Could Keep Greif Inc From Hitting Its Targets

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The Strong Dollar Could Keep Greif Inc From Hitting Its Targets
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Greif, Inc. (NYSE: GEF) faces a downside risk to targets if the U.S. dollar continues to strengthen. The dollar gained 0.59 percent against the euro to 1.1087. However, the pound gained for the first time since the U.K.'s vote to leave the European Union and rose 0.92 percent against the dollar to 1.3338.

The company, which makes steel, plastic, fibre, flexible and corrugated containers and containerboards, expects 2016 Class A earnings per share of $2.20–$2.46 per share. BMO expects 2016 EPS of $2.30 and raised its 2017 EPS view to $2.70 from $2.60.

"GEF needs to execute and deliver on promises. A tough global macro backdrop is the big challenge," analyst Mark Wilde wrote in a note.

Related Link: Greif's Management Is Gaining Credibility In Baird's View

Wilde raised his 2017 EBIT forecast by $10 million to $345 million versus the company's target of $365 million–$385 million.

Wilde, who remains Market Perform on the stock, said although there are clear signs of improvement in rigid packaging (RIPS), Latin America remains challenged. In addition, sluggish industrial activity poses a challenge to volumes.

Turnaround efforts in flexibles (FPS) "remain a big question mark," while paper packaging (PPS) is "facing increased cyclical pressure" partly due to lower containerboard/corrugated sheet prices.

Shares of Greif closed Monday's regular trading session at $35.73, while Wilde has a price target of $36. In Tuesday's pre-market session, Greif was trading up 1.73 percent to $36.35.

Latest Ratings for GEF

DateFirmActionFromTo
Nov 2016KeyBancDowngradesHoldUnderweight
Nov 2016Bank of AmericaDowngradesBuyNeutral
Nov 2016DA DavidsonDowngradesNeutralUnderperform

View More Analyst Ratings for GEF
View the Latest Analyst Ratings

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