Goldman Neutral On Graham Packaging Company Inc. (GRM)

Goldman Sachs has a Neutral rating and a $14 price target on shares of Graham Packaging Company Inc. GRM. In a note sent to clients, Goldman writes, "We recently hosted Graham Packaging (GRM) senior management for a day of meetings with investors in New York. Our takeaways from the meetings are positive and underscore that GRM shares are a compelling long-term investment opportunity. While we are constructive on the shares, we rate GRM stock Neutral as we see more compelling risk/reward in Ball (BLL) and Crown (CCK) shares—both rated Buy." Goldman goes on to say, "We have the following takeaways from our meetings: (1) GRM highlighted that the integration of the Liquid Container acquisition is going well, and GRM is positioned to exceed its $20 mn synergies target (over 2-years) as purchasing, SG&A and operations synergies are being achieved faster than initially anticipated. We raise our 2012 EPS estimate to $2.30 from $2.20 previously to reflect $20 mn of synergies savings vs. $10 mn previously. Our 2010-2011 EPS estimates are unchanged. (2) GRM is well positioned to boost its top line growth by 100-200 bp per annum over the next several years from continued conversions from glass and metal packaging into plastics. (3) Debt reduction will be the number one priority for FCF, but cash flow could also be utilized for bolt on acquisitions and organic growth. (4) Within its current capex budget, GRM is well positioned to grow internationally with on-site facilities scheduled to come online in Japan and Indonesia in 2011." Shares of GRM lost 33 cents yesterday to close at $13.39, a loss of 2.4%.