Sealed Air On A 'Transformative Journey,' UBS Initiates With Buy Rating

UBS initiated coverage on Sealed Air Corp SEE with Buy rating and $54 price target.

The analysts believe the company is well-positioned to grow organic sales 4 percent and achieve EBITDA margin of more than 18 percent by 2018 due to its razor-and-blade business model that results in a high level of recurring consumables, despite current concerns about the pace of growth and back-end loaded guidance.

"Factors driving our forecast for top-line growth include significant exposure to an upcoming cyclical recovery in the US beef market, secular growth trends in e-commerce packaging as well as cleaning solutions for increasing health standards," wrote UBS, mentioning that about 15 percent of total sales is exposed to fresh red meat, which is leveraged to the beef cycle and nearly 7 percent of sales is to e-commerce and related third-party logistics.

The analysts expect the "Get Fit" cost savings initiatives and benefits from lower raw material costs to drive margins from 16.7 percent in 2015 to 18.3 percent by 2018.