Sealed Air's Growth Could Balloon In 2018

Baird reiterated its Outperform rating on Sealed Air Corp SEE saying that risk/reward for shares is attractive at current levels and strong free cash flow could limit downside.

"In particular, we believe that while a choppy macroeconomic backdrop has/will weigh on core sales growth in 2016, new product initiatives are clearly gaining momentum—underlying our thesis that $750+ million of FCF in 2018 is realistic," senior analyst Ghansham Panjabi wrote in a note.

This suggests the company is poised to aggressively repurchase shares in the event of a significant drop in the share prices.

Meanwhile, Panjabi's bullish thesis on Sealed Air is based on strong internal execution, with core sales projected to grow over the next few quarters.

"[W]e believe that the value proposition of new products for both Food and Product Care are resonating with customers, which, with an overlay of discrete end-market tailwinds (N.A. cattle production cycle, etc.), supports our intrinsic assumption related to improved core sales growth," Panjabi added.

In addition, the analyst said incremental cost savings are set to exceed $60 million in 2017, driven by ongoing restructuring and a simplification of the cost profile.

At time of writing, shares of Sealed Air were up 0.35 percent to $46.42. Panjabi's $55 price target represents a potential upside of 19.5 percent.