HARTFORD, Conn. (AP) ¿ Greif Inc. is poised for a higher profit in 2010 following cost-cutting this year, an analyst said Tuesday as he raised his price target for the industrial packaging products manufacturer by nearly 10 percent. Analyst Christopher D. Manuel of KeyBanc Capital Markets maintained his earnings estimate of $3.45 per share for this year even as he cut his third quarter estimate to 90 cents per share from $1.14 per share. He maintained his 2010 estimate at $4.15 per share. But he raised his price target for the Delaware, Ohio, company to $58 from $53. On average, analysts surveyed by Thomson Reuters expect Greif to earn $3.32 per share this year, 95 cents per share for the third quarter and $4.05 per share for 2010. Last Wednesday, Greif said its fiscal second-quarter profit and sales fell sharply as the recession cut into demand for its industrial packaging products. But it said it saw signs of improvement in its markets as the quarter ended, and reaffirmed its 2009 earnings forecast of between $3.25 and $3.75 per Class A share.
Manuel said in a note to investors he is encouraged by the improvement in volumes in all regions and believes cost savings are likely to be about $120 million this year. His earnings estimate, assuming continued improvement in volumes for the rest of the year, includes a substantial increase in profit from the third quarter to the fourth quarter. He said he believes his assumption is reasonable because of cuts of more than 2,000 jobs and the shutting of 13 plants, he said. "Moreover, we believe the outlook for 2010 could be substantially better than currently contemplated by investors, given that the bulk of cost savings have not yet become evident," Manuel said.