Packaging stocks face earnings pressure from Middle East risks, yet stable fundamentals support potential upside, BofA Securities said in a note Sunday.
The firm said Q1 should see limited impact, but Q2 and Q3 will likely be more affected due to geopolitical uncertainty. "That said, pass-throughs, hedging, inventory positions/accounting, and self-make energy (in virgin paper/board) dampen the energy hit, even if they also complicate the analysis."
The conflict creates demand and margin risks, but share prices already reflect much of this pullback. Companies that beat expectations on volume or earnings could see "disproportionate" stock gains, the firm said, adding that Q1 results will help identify relative catalysts.
Specialty packaging will face higher costs for resin, films, energy, freight, and other materials. Can producers are dealing with tighter metal markets, but supply chains remain manageable. Containerboard estimates fell due to a $20 per ton February price drop, but a $40 per ton March increase improves momentum, the firm said, adding that it expects one more price hike in 2026.
BofA adjusted price target for Amcor (AMCR) from $56 to $48, Ardagh Metal Packaging's (AMBP) from $4 to $3.70, AptarGroup's (ATR) from $147 to $145, and Avery Dennison's (AVY) from $210 to $201. Ball (BALL) went from $71 to $70, Crown Holdings (CCK) decreased from $131 to $126, and Greif (GEF) dropped from $75 to $71.
O-I Glass (OI) fell from $19 to $18, Silgan (SLGN) went from $55 to $52, Sonoco Products (SON) declined from $68 to $67, International Paper (IP) decreased from $53 to $47, Louisiana Pacific (LPX) fell from $95 to $86, Packaging Corporation of America (PKG) went from $270 to $241, and Sylvamo (SLVM) dropped from $62 to $59, BofA said.
Price: 205.11, Change: +0.65, Percent Change: +0.32
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