In a report released yesterday, George Staphos from Bank of America Securities maintained a Buy rating on Sonoco Products, with a price target of $62.00.
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George Staphos has given his Buy rating due to a combination of factors including Sonoco Products’ strategic divestiture of its ThermoSafe business for up to $725 million. This move aligns with the company’s strategy to simplify its portfolio and reduce debt, following significant acquisitions and divestitures in recent years. The proceeds from the sale are intended to help achieve a net leverage target of less than 3x, which is seen as a positive step towards financial stability.
Additionally, the divestiture allows Sonoco to sharpen its focus on its core metal and fiber-based packaging operations, potentially leading to synergies and earnings improvements. Despite the challenging macroeconomic environment, the company’s valuation and the potential for growth through its portfolio transformation provide a favorable outlook, supporting the Buy rating.