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Sealed Air shares slide 6% as BofA Merrill downgrades stock to neutral after CFO firing

Ciara Linnane

Shares of food packaging company Sealed Air Corp. slid 6% Friday, after Bank of America Merrill Lynch downgraded the stock to neutral from buy following the termination of Chief Financial Officer William Stiehl. The company announced Stiehl's departure late Thursday, following an internal review by the Board Audit Committee in connection with an investigation by the Securities and Exchange Commission. The company had received an additional subpoena for documents and information on May 2, relating to the process used in selecting its auditor for the period beginning fiscal 2015 and relating to the audit firm's independence. BofA analysts led by George Staphos said they had upgraded Sealed Air in December after it announced a transformation program and that they fully respect Chief Executive Ted Doheny and incoming CFO James Sullivan. However, "multiples might remain compressed until the SEC investigation concludes," they wrote in a note to clients. "Second, investors might discount some elements of SEE's guidance until greater visibility is achieved because 1Q was challenging, the macro is somewhat murky, and because there will be a new CFO in place." The probe has also likely distracted employees and that could hurt operating performance. Sealed Air shares have gained 18% in 2019, matching the S&P 500's gains.