DA Davidson Downgrades Sonoco To Underperform Amid Recent Upside

Shares of Sonoco Products Co SON have appreciated 19 percent over the past two months.

D.A. Davidson’s Steven Chercover downgraded the rating on the company to Underperform, with a price target of $42.

Chercover mentioned that although investor sentiment on the stock has turned from “bearish to optimistic,” nothing had really changed for the company, including “consistent profitability, steady equity performance, and reliable dividend.”

Dividend Increase Likely

Sunoco Products had increased its annual dividend by almost 10 percent in April 2015. The company has also annually increased its divided by $0.04 each year during 2012-2014, with 2015 marking the 33rd successive year that the dividend was raised.

“With just over $182 million in cash on the balance sheet at 2015 year end, ~100 million shares outstanding, and our projection of an additional $50 million in cash on hand by year end, a continuation of the tradition later this month would not surprise us,” Chercover stated.

More Information On April 21

Chercover expects the company to provide information regarding how much of its $100 million share buyback authorization has been completed when Sunoco Products reports its earnings on April 21.

“We’ll also be looking for an update on the company’s initiative to grow its Flexible Packaging business, which is a key component of the strategy to diminish its industrial exposure,” the analyst added.