Investor Pessimism Casts Shadow on Sealed Air’s Future Investor Pessimism Casts Shadow on Sealed Air’s Future

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By Ronald Tech

Sealed Air Stock Plummets

open cardboard box with bubble wrap

Sealed Air (NYSE:SEE) witnessed a substantial 6.6% drop to a three-month low during Friday’s trading session. This tumble followed a day after the company reported surpassing Q2 adjusted earnings expectations, but then dashed hopes by issuing a dreary outlook for Q3.

For the second quarter, Sealed Air’s net earnings ascended to $97.8 million, equating to $0.67 per share, up from $93.9 million or $0.65 per share in the corresponding quarter last year. Although revenues slightly decreased to $1.34 billion, the company credited this to the lower operating costs spurred by the CTO2Grow initiative and heightened volumes. This was despite encountering hurdles in realizing net prices.

Q3 Expectations Fall Short

Anticipating Q3, Sealed Air (SEE) foresees earnings amounting to $0.67 per share, a figure that falls below the $0.72 analyst consensus provided by FactSet. Revenue projections stand at $1.33 billion, a far cry from the $1.36 billion consensus mark.

Jefferies’ Downgrade and 2025 Prognosis

Jefferies analyst Philip Ng delivered a somber prediction by labeling 2025 as “another transition year” for Sealed Air (SEE). Ng downgraded the company’s shares from Buy to Hold, lowering the price target significantly from $47 to $35. Ng highlighted that while Sealed Air had an impressive performance in H1, weakening consumer demand coupled with escalating secular challenges in Protective categories could cause a decline in volumes with 2025 possibly witnessing another downturn.

Ng voiced a constructive tone about Sealed Air’s ongoing turnaround efforts including structural cost reductions, optimization of operations, and a revamp of product offerings. He projected that, although these changes are positive, they will take time to come to fruition. Ng anticipated that Sealed Air’s stock might trade sideways with chances of flat-to-lower earnings in 2025, marking the potential third consecutive year of such performance.

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