UPDATE: JP Morgan Downgrades Greif to Neutral on End Market Pressures

JP Morgan lowers its rating on Greif

and reduces its price target from $57 to $48. JP Morgan notes, "We believe GEF is well positioned longer term in its niche businesses, with a solid track record of margin improvement in rigid packaging that could be replicated in Flexibles in years ahead if volumes recover in Europe. That said, GEF's F2Q was again negatively impacted by continued end market pressures in both its Rigid and Flexible Packaging segments, particularly in Europe. While FCF generation remained strong, we are cautious about GEF's ability to hit its 2012 EBITDA target of $500-$525mm as we expect additional restructuring in the Rigids business in Europe and headwinds from overcapacity in the Saudi hub in Flexibles. In addition, while valuation on current depressed earnings does not look expensive, limited end market visibility in the key European business (~50% of Industrial sales) and increased foreign currency volatility present risks." GEF closed at $41.40 on Friday.