Jefferies Modestly Negative On Bemis (BMS)

Jefferies & Co. is modestly negative on Bemis Company, Inc. BMS, as it sees polyethylene prices impacting 2011 guidance. It has a Hold rating on shares. In a report sent to clients, Jefferies writes, "Bemis and Sealed Air are both large resin users (30 -35% of COGS), with PE representing ~50% of their usage. However, with PE prices likely higher in November, it could be challenging for both companies to reach price cost parity by 1Q11 as planned. Sealed Air assumed average resin prices for 4Q would be flat sequentially, and Bemis factored in only the resin increases they have seen into their guidance. In terms of leverage, we note $0.01 increase in PE translates to a $0.06 (3.6%) and $0.02 (1.9%) drag on EPS for Bemis and Sealed Air on an annual basis, respectively." Shares of BMS lost 13 cents yesterday to close at $31.39, a loss of 0.4%.