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Goldman Sachs: 27% Upside in Sealed Air Despite Buyside Pushback


Goldman Sachs has a conviction buy rating on Sealed Air Corp (NYSE: SEE) with a $59 price target. This implies 27 percent upside.

Analyst Brian Maguire writes that his earlier conviction buy rating received the most pushback of his ratings on the sector. Investors called Sealed Air "a momentum stock that has lost momentum."

The selloff was triggered by a weak earnings report which suggested 2016 earnings would be backloaded. Goldman Sachs maintains a positive rating because evidence for a second half recovery is present.

The report reads, "First, recent USDA data on cattle  feedlot placements (up 5%-7% in March/April) point to a 2H2016 beef cycle turn. Second, SEE’s equipment sales rose 10% YoY in 1Q2016 and we note that equipment sales are have been a good leading indicator for SEE’s packaging sales in future quarters. Third, capitalized inventory expenses that negatively impacted 1H2016 are largely timing related and should partially reverse in 2H2016."

The $59 price target is based a sum of the parts valuation and implies 11.5 times expected 2017 EBITDA.

Posted-In: Analyst Color Analyst Ratings


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