Amcor shares advance on analyst upgrades
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More news: Shares in Amcor were up 1.7% to $15.22 in early trading after a number of brokers upgraded their rating and price target on the stock.
The upgrades followed the recent selloff in the packaging giant's shares after its $13 billion acquisition of US-based Berry Global.
Citi analysts upgraded Amcor to ‘buy’ from ‘neutral’ and lifted its target price on the ASX-listed shares to $19 from $17 previously.
Truist Securities also lifted their rating on Amcor's US-listed shares to 'buy' from 'hold', while BofA Securities upgraded Amcor to buy' from 'underperform'.
Citi upgrades Amcor after recent sell-off
The news: Citi analysts have upgraded packaging giant Amcor after the recent sell-off in its shares following its $13 billion acquisition of US-based Berry Global late last year.
The numbers: The brokerage upgraded Amcor to ‘buy’ from ‘neutral’ and lifted its target price on the ASX-listed shares to $19 from $17. Amcor shares closed at $14.96 on Wednesday. Its NYSE-listed shares closed at USD9.43 ($15.10) overnight.
The context: Citi cited the recent sell-off in Amcor shares as the trigger for the upgrade. Amcor shares are down more than 9% since the company announced its acquisition of Berry Global in late-November in an effort to turn into an even bigger force in the consumer and healthcare packaging markets.
The analysts said the Amcor-Berry combination is logical, allowing the market leaders to move further down the cost curve amidst persistent volume challenges, while expanding unmatched procurement scale and research and development capabilities.
They believe Amcor could outperform its initial synergy targets from the merger, while sustained recovery in the Flexibles segment and stabilisation in Rigids could be other potential catalysts.
What they said: “We expect organic volume growth may be muted for Packagers in the near-term; accordingly, producers with lower-risk growth drivers and potentially stronger toplines could outperform,” they said in a note.
The sources: Citi research, Truist Securities research, BofA research
