Amcor’s Growth Potential and Valuation Make It a Buy Despite Challenges
George Staphos has rated Amcor as a Buy, citing its growth potential and current valuation despite challenges in volume growth, especially in North America. The acquisition of Berry Global is expected to enhance Amcor's portfolio and earnings, improving scale and margins. With a free cash flow yield of 9.7%, the market may undervalue Amcor, and potential deconsolidation of non-core revenues could further enhance margins. Jefferies also reiterated a Buy rating with a $11.67 price target.
George Staphos has given his Buy rating due to a combination of factors related to Amcor’s potential for growth and its current valuation. Despite recent challenges in volume growth and execution, particularly in North America, the acquisition of Berry Global is seen as a transformative move that could enhance Amcor’s portfolio and earnings. This acquisition is expected to improve scale and margins in both the Rigids and Flexibles segments, which could lead to better growth prospects.
Furthermore, Amcor’s current valuation presents an opportunity, as even minor improvements in market growth or margin expectations could significantly impact its stock price. With a free cash flow yield of 9.7%, which could rise to 10.8% when accounting for one-time costs, the market appears to undervalue Amcor. Additionally, potential deconsolidation of non-core revenues could improve margins and returns, making the stock an attractive buy at its current price.
Staphos covers the Consumer Cyclical sector, focusing on stocks such as International Paper Co, Greif Class A, and Packaging. According to TipRanks, Staphos has an average return of 4.5% and a 51.04% success rate on recommended stocks.
In another report released on September 10, Jefferies also reiterated a Buy rating on the stock with a $11.67 price target.
