LOS ANGELES
,
July 6, 2022
(Industry Intelligence Inc.)
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Following Sonoco’s upward revision of earnings guidance from US$1.20-1.30 to US$1.60-1.70 per share, analysts issued the following comments: BMO Capital Markets/Mark Wilde BMO analyst Mark Wilde believes that Sonoco will continue to do well over next two to three years. In a July 5 note, Wilde credits Sonoco CEO Howard Coker for cleaning up the company’s disparate portfolio. However, in Wilde’s view, Sonoco’s industrial segment may face near-term challenges with a recession looming. Wilde also notes that Sonoco’s 8.2x 2022E EBITDA valuation is ‘not particularly expensive.’ Wilde assigns a price target of $65 to the Sonoco stock, with 16% total return, on Sonoco’s higher product price realizations, strong volumes in two segments (Consumer and All Other), and better-than-expected performance of MetalPack, which was acquired in January 2022. Zack’s Commentary The Sonoco stock is rated ‘Buy’ at Zack’s, with consensus estimate for Sonoco's full-year earnings up 13%, according to a Zack’s report on July 4. Optimism surrounds the stock’s 1.6% year-to-date return, which Zack’s considers outperforming the sector peers, as the Industrial Products sector registers a -24.2% year-to-date return on average. Zack’s sees Sonoco's industrial business eventually gaining from strong demand for global tubes, cores and cones. According to a report on June 23, Zack’s analysts expect that productivity improvement, standardization, synergies, supply chain optimization will help meet Sonoco's cost savings target of $20 million by 2024 despite near-term cost pressures from raw material sourcing, energy and freight.
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