BofA Securities Reiterates Buy Rating on Greif Inc. (GEF)

BofA Securities analyst George Staphos reiterated a Buy rating and $73.00 price target on Greif Inc. (NYSE: GEF).

The analyst commented, "We reiterate our Buy rating on GEF largely given its valuation (i.e. 7x EBITDA on our C25 forecasts) and exposure to improved paperboard pricing trends. Our earlier flash (see report here) has details from F3Q. Key points from the quarter: (a) Volumes were solid overall and up in both segments including 4.7% in Global Industrial Packaging (GIP) and 2.9% in Paper Packaging & Services (PPS). Additionally, we were encouraged by the 10% q/q volume improvement in CorrChoice in PPS - the sheet feeder market can be a leading indicator of broader corrugated trends; (b) Looking ahead GEF noted that a return to F2022 volumes would add $160mn of EBITDA and, when combined with an incremental F25 impact of recently recognized paper price increases, this could put EBITDA over $900mn. That said, volumes are still well below F2022 levels and it appears that there are still some mixed demand trends across GEF’s portfolio from here. Most GEF businesses seem better but North American steel remains weak; (c) Meantime, we are encouraged by GEF’s portfolio realignment including its ~$90mn divestiture of Delta Petroleum and it appears that the integration and synergy capture of IPACKCHEM is on track; (d) Lastly, we see GEF as fairly well positioned in a volume recovery given its recent operational excellence efforts and the potential for further benefits to accrue from its operating model change. Incremental margins could exceed 50pct."

For an analyst ratings summary and ratings history on Greif Inc. click here. For more ratings news on Greif Inc. click here.

Shares of Greif Inc. closed at $61.93 yesterday.

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