Anojja Shah, an analyst from UBS, has initiated a new Hold rating on Silgan Holdings (SLGN).
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Anojja Shah has given his Hold rating due to a combination of factors impacting Silgan Holdings. While the company’s strategy to enhance its high-margin dispensing business through acquisitions is promising, there are concerns about the potential decline in consumer discretionary spending in the US, which could hinder growth in the coming year. Shah appreciates Silgan’s focus on reducing debt and anticipates that leverage will return to a more favorable range by the end of 2025, potentially enabling capital returns and further acquisitions in 2026.
However, Shah remains cautious as consensus earnings estimates may still be too optimistic, and there are indications that consumer spending could weaken further. The company’s exposure to consumer discretionary markets, particularly in the middle of its portfolio, poses a risk, as evidenced by a projected decline in volumes. Despite the attractive free cash flow yield, the uncertainties surrounding consumer behavior and earnings estimates have led to a Hold rating, with a price target of $42.