Shares of SIG Group AG (SIX:SIGNC) extended losses Friday, falling over 2% after Morgan Stanley downgraded the packaging company’s rating to “equal-weight” from “overweight” and cut its price target to CHF12 from CHF17.20.
Morgan Stanley cited weaker-than-expected momentum and risks to the company’s mid-term targets.
The brokerage said SIG’s second-half 2025 revenue growth is now expected to decline around 3% year-over-year in constant currency, compared with a previous forecast of 3% growth.
The underlying EBITDA margin is projected at 23.3%, down from 25.5%. The company’s 2025 dividend suspension was highlighted as a key development.
Morgan Stanley noted that the suspension could extend into 2026 and said net debt to EBITDA is expected to remain below the 4x covenant.
SIG is scheduled to host an Investor Day on Oct. 30 to outline its updated strategy. The company plans to focus on higher-margin aseptic operations, divest smaller non-aseptic units, accelerate growth in bag-in-box and spouted pouches, and launch a performance improvement program.
Non-recurring charges are projected at €310-360 million pre-tax, with €75-100 million affecting adjusted EBITDA and net income, mostly in the third quarter.
Approximately 90% of these non-recurring charges are non-cash and relate to impairments of customer relationships, technologies, and equipment.
Morgan Stanley revised its forecasts for top-line growth and margins. The brokerage now assumes revenue growth will recover to roughly 4% over the next three years and lowered the adjusted EBITDA margin forecast by 100-150 basis points to about 25.5%, below both consensus estimates and SIG’s guidance of above 27%.
As a result, 2025-2027 EBITDA estimates were cut by 8-10%, or 8-9% below consensus. Following the downgrade, SIG shares trade at 8.7 times next-twelve-month EV/EBITDA, near the bottom of the company’s historical range since its 2018 IPO.
Morgan Stanley said a re-rating would depend on SIG delivering on self-help initiatives, updating mid-term targets, and clarifying dividend prospects.
The brokerage maintained a relative preference for Smurfit Kappa and Sappi, noting that SIG’s warning represents a small incremental headwind for Stora Enso due to liquid board exposure.
Source :
https://www.investing.com/news/stock-market-news/sig-shares-extend-losses-as-ms-cuts-rating-flags-weak-revenue-and-dividend-pause-4246344
