However, Q407 EPS exceeded our estimate of $0.50 primarily on the back of acquisitions and benefits from continued cost reduction efforts and productivity improvements. Silgan is closing down facilities to streamline operations and reduce operating costs. The company has been struggling with continued low food-can and plastic-container volumes. No significant volume growth is expected in this year. Our target price implies only 3.1% total upside potential from the current price.

Currently, Silgan shares trade at 13.3x our 2008 EPS estimate of $3.50, which is almost in-line with the industry median multiple of 13.4x. In the past, Silgan has traded at a premium to the industry multiple, reflecting its aggressive approach towards reducing debt and maintaining profitability through price hikes.

Moreover, we do not expect a large expansion in P/E multiple considering the company's lower growth rate as compared to its peers. Applying a P/E multiple of about 13.5x to our 2008 EPS estimate, we arrive at a target price of $47.25 per share. We retain our Hold rating on shares of SLGN.

Carnival a Hold, Pre-Report

We maintain our Hold rating for Carnival Corporation (CCL). We expect Carnival to continue to trade at a premium to its largest competitor over the near-term. However, given our expectation for flat operating margins and continued pricing pressures, we do not feel that further material price appreciation is warranted at this time.

Accordingly, we continue to prefer the valuation of Royal Caribbean (RCL) at current levels. Carnival has historically traded at a slight premium to Royal Caribbean, based on forward price-to-earnings multiples. This relationship still holds, based on current prices and our forward 12-month EPS estimates for both companies. While Carnival Corporation is trading at 12.2x estimated 2008 earnings, Royal Caribbean is currently trading at 9.5x estimated 2008 EPS. We expect Carnival to continue to trade at a premium over the near-term.
However, given our expectation for flat operating margins and continued pricing pressures, we do not feel that further material price appreciation is warranted at this time. As such, our six-month target price on CCL shares of $40 is based on a multiple of 13x expected 2008 earnings. The company is scheduled to report first quarter financial results on Thursday, March 20. We will update our outlook and estimates at that time.