On Friday, Citi made an adjustment to its financial outlook for Sealed Air Corporation (NYSE:SEE), increasing the price target to $44.00 from the previous $42.00, while keeping a Buy rating on the stock. The revision follows Sealed Air's strong performance in the first quarter of the year, which prompted the analyst to update the 2024 earnings per share (EPS) estimate by an additional $0.05, bringing it to $2.92.
The adjustment in the price target reflects a slight increase in the estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024, now set at $1.11 billion, up by $5 million. This forecast is based on anticipated cost savings of $90 million and volume growth contributing an additional $20 million. However, these positive factors are expected to be balanced by a net price decrease of $120 million.
The analyst notes that the net price movement has gone down by $20 million compared to February's expectations. This is attributed to a decrease in raw material costs, which is expected to add $100 million, but is counterbalanced by a reduction in prices by $140 million and non-raw material inflation costs of $40 million.
Despite a weaker outlook for the second and third quarters, the updated next twelve months (NTM) EBITDA and net debt figures have led to a modest increase in Sealed Air's price target. The analyst reaffirms the Buy rating, emphasizing Sealed Air's valuation as fundamentally undervalued at 8.4 times NTM EBITDA, compared to the five-year average of 9.3 times. Key factors that could drive the company's value include continued volume recovery, debt reduction, and the appointment of a permanent chief executive officer.
InvestingPro Insights
Sealed Air Corporation (NYSE:SEE) has been showing a robust financial performance, as reflected in the recent price target increase by Citi. In line with this, InvestingPro data reveals a market capitalization of $5.09 billion and a forward-looking P/E Ratio of 11.17, suggesting a more attractive valuation relative to earnings than the industry average. The company's strong free cash flow yield is echoed by an InvestingPro Tip, indicating that the valuation implies a strong free cash flow yield.
Furthermore, Sealed Air has demonstrated a significant return over the last week, with a 10.05% price total return, which may capture the attention of investors seeking short-term gains. This is complemented by the company's consistent dividend payments for 19 consecutive years, offering a current dividend yield of 2.29%, a testament to its commitment to returning value to shareholders.
Investors looking for more in-depth analysis and additional InvestingPro Tips can find them at Investing.com/pro/SEE. Currently, there are 7 more tips available, which can provide further insights into Sealed Air's financial health and stock performance. To access these exclusive insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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