Philip Ng, an analyst from Jefferies, has initiated a new Buy rating on Amcor (AMCR).
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Philip Ng has given his Buy rating due to a combination of factors that present a compelling risk-reward scenario for Amcor’s stock. The company is trading at a low valuation multiple, which Ng believes is unjustified given the potential for earnings growth from the integration of BERY and the strategic divestment of non-core assets. Amcor has a strong track record of successfully integrating large acquisitions, and the BERY deal is expected to be beneficial for shareholders, especially with the stock price currently below the levels when the deal was announced.
Ng also highlights the significant cost synergies identified by Amcor, which are expected to drive earnings momentum. The complementary nature of the resin grades purchased by Amcor and BERY allows for better pricing and economies of scale, further enhancing the company’s leverage. Additionally, potential asset sales, such as the divestment of the North American beverage business, could act as catalysts for growth and improve the company’s financial metrics. Overall, Ng sees a path to low single-digit percentage growth driven by strategic focus on higher-margin categories and cross-selling opportunities.
In another report released on June 26, Wells Fargo also initiated coverage with a Buy rating on the stock with a $10.00 price target.