Amcor’s (AMC) third quarter 2024 result was above our forecasts and management’s guidance,” Raymond said.
“Here’s what we see are the key positives:
- AMC returned to earnings growth one quarter earlier than expected.
- Strong cost out and benefits from restructuring initiatives delivered margin improvement in both Flexibles and Rigid Packaging, despite lower sales and volumes.
- Management has narrowed financial year 2024 underlying earnings per share (EPS) guidance toward the top end of the range.
“And here are the key negatives:
- Destocking (particularly in healthcare and North America beverages) continues to be a drag on volume.
- Balance sheet remains relatively stretched with net debt-to-EBITDA (ND/EBITDA) at 3.4x, although management expects leverage to fall to approx. 3x by the end of financial year 2024.
“We increase financial year 2024-2026F underlying EPS by 3%.
“We now forecast financial year 2024 underlying EPS of US70.1 cash per share (cps) vs management’s updated guidance of between US68.5-71 cps.
“Our target price lifts to $15.95 (from $15.65), and we maintain our ADD rating,” Raymond said.
Amcor (AMC)
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