Sealed Air's (NYSE:SEE) Costs Are Challenged in 2011

Sealed Air's (NYSE:SEE) polyethylene costs and polypropylene rose by 18 percent and 12 percent in 2010, and going forward that looks to continue to be the case in 2011, putting more pressure on margins.

Barclays says, "...Given an 18% YoY rise in 2010 4Q polyethylene costs and a 12% YoY rise in polypropylene costs, we believe the risk to EPS estimates is on the downside. However, some of the headwinds will likely be mitigated by the benefits of partial pass-through price hikes, protective packaging volume improvement, and improved food packaging volumes (helped by rising slaughter rates resulting from rising feedstock costs).

"We are reducing our 4Q10 EPS from $0.45 to $0.43 as high resin costs likely more than offset the favourable factors noted above...We are reducing our 2011 EPS estimate from $1.80 to $1.70...We are also reducing our 2012 EPS from $2.20 to $2.05 and introducing our 2013 EPS estimate at $2.20."

Barclays reiterates an "Equalweight" rating on Sealed Air (SEE), which closed Friday at $25.45, losing $0.22, or 0.86 percent. Barclays lowered their price target on Sealed Air from $25 to $23.