Reynolds Consumer Products (REYN) remains on the sidelines as rising aluminum prices and broader commodity cost pressures weigh on its outlook, RBC Capital Markets said in a Monday note.

Consumer headwinds have affected demand across the company's categories and could worsen if the Middle East conflict drives higher inflation, analysts wrote, while noting some improvement in consumption trends.

The company is likely to post in-line Q1 results, supported by encouraging recent performance. However, inflation in key production inputs, primarily aluminum, could pressure margins.

Reynolds Consumer is scheduled to report its Q1 results Wednesday.

Channel checks indicated that the company is gaining volume share in the waste bags segment following increased promotional and pricing activity, according to the brokerage. The investment firm said that the foil pricing has so far shown limited demand elasticity.

Reynolds Consumer has exposure to industrial and energy commodities, principally aluminum, and also depends on third-party rail and truck networks, making it vulnerable to volatility in freight and logistics labor costs, RBC stated.

The brokerage has a sector perform rating on the stock, with a price target of $24 per share.

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