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Sealed Air Corp. (SEE)

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Sealed Air Corp's (SEE) second-quarter 2012 total revenue increased 65% year over year to $2 billion while adjusted net earnings plunged 50% to $0.20 per share, due to weaker-than-expected margins. The company lagged the Zacks Consensus Estimate on both lines.

Even though the Diversey acquisition has added to the company's growth profile, the company is exposed to significant leverage owing to the debt incurred to fund the acquisition. Volumes at Diversey have been weaker than expected due to its wide exposure in Europe. Furthermore, given the size of the deal, we are apprehensive of integration risks.

Considering the difficult macro environment, foreign exchange headwinds and lower volumes, the company has reduced its EPS guidance for 2012 to $1.00-$1.10. We thus maintain our Underperform recommendation with a target price of $14.00.

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