Strategic Transformation and Undervaluation Drive Buy Rating for Sonoco Products

Sonoco Products (SON) has received a new Buy rating, initiated by Jefferies analyst, Philip Ng.

Philip Ng has given his Buy rating due to a combination of factors surrounding Sonoco Products’ strategic transformation and financial performance. The company is nearing the completion of a significant portfolio overhaul that began in 2020, which included substantial mergers and acquisitions as well as divestitures. This transformation has led to a notable expansion in margins and free cash flow conversion, although these improvements have been somewhat obscured by the financial adjustments involved in the process.
Ng’s analysis indicates that Sonoco’s pro forma portfolio is undervalued, with a potential upside of approximately 43% in stock price. The company’s focus on its core steel packaging and URB businesses, along with increased capital expenditures, has enhanced productivity and positioned it well for organic growth. Additionally, Sonoco’s efforts to deleverage, including proceeds from divestitures and the anticipated ThermoSafe sale, are expected to strengthen its financial position further. These factors contribute to Ng’s optimistic outlook and Buy rating for Sonoco Products.

According to TipRanks, Ng is a 5-star analyst with an average return of 7.6% and a 50.51% success rate. Ng covers the Consumer Cyclical sector, focusing on stocks such as International Paper Co, Ball, and Packaging.