Ahead Of The Bell: Sonoco Products Downgraded

NEW YORK (AP) — A recent rally in Sonoco Products Co.'s share price and continued weakness in its industrial segment led an analyst Wednesday to downgrade shares of the U.S. packaging maker.

KeyBanc analyst Jason Brown cut his rating on the shares to "Hold" from "Buy," noting the stock has gained 40 percent since March 9, better than the S&P 500's 34 percent advance.

Furthermore, global volumes for the Hartsville, S.C.-based company' tubes and cores business, which makes paperboard and plastic products as well as reels for wire and cables, are down as much as 20 percent.

Brown said that global weakness offsets strength in Sonoco's consumer-related businesses.

"All in, while industrial demand continues to limp along, we are not anticipating a broad lift in global economies (i.e., volume trajectory) until 2010," the analyst wrote in a client note.

"Even with the prospect of further restructurings to chip away at the cost structure we believe year-over-year profit contribution from the segments will be materially lower until we begin to lap easier comparisons (late 2009/early 2010) or an economic recovery materializes," Brown added.