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On Friday, RBC Capital analysts reaffirmed their Outperform rating for Crown Holdings (NYSE: NYSE:CCK) stock, setting a price target of $115.00. The decision reflects the company’s strong performance in the first quarter and its optimistic guidance for fiscal year 2025. Trading near its 52-week high of $100.23, Crown Holdings has delivered an impressive 18.77% return year-to-date, with InvestingPro analysis suggesting the stock remains slightly undervalued.
Crown Holdings’ Q1 results exceeded expectations, driven by strong North American volumes and effective execution. The company has also accelerated the conversion of European substrates to cans. These factors, coupled with a favorable 80/20 NAB mix outperforming the alcohol and beer segments, have contributed to the positive outlook. The company maintains a strong financial health score according to InvestingPro, with consistent dividend growth for four consecutive years and aggressive share buyback programs.
The company anticipates minimal tariff impacts, estimating a total effect of $25 million. In upcoming meetings, investors are expected to focus on the volume outlook, including a $15 million expected indirect impact from tariffs in the Transit segment, as well as price/cost dynamics and strategies to enhance capital return through potential dividend and buyback increases.
For fiscal year 2025, Crown Holdings plans capital expenditures of $450 million, targeting a net leverage of approximately 2.5 times. The company projects a free cash flow of around $800 million, with allocations of $250 million for deleveraging, $250 million for dividends, and $300 million for share buybacks, of which $200 million has already been completed.
In other recent news, Crown Holdings has announced plans to expand its Ponta Grossa beverage can plant in Brazil by adding a third high-speed production line, increasing the plant’s capacity from 2.4 billion to 3.6 billion cans annually. This expansion, expected to be operational by the third quarter of 2026, aims to meet the growing demand from both alcoholic and non-alcoholic beverage sectors in southern Brazil. Despite the expansion, Crown Holdings maintains its financial outlook for 2025, projecting an adjusted free cash flow of approximately $800 million and capital expenditures of around $450 million. In related developments, Crown Holdings plans to redeem all outstanding 4.750% Senior Notes due 2026, initially valued at $875 million, contingent upon the successful issuance of $700 million in new 5.875% Senior Notes due 2033. The issuance of these new notes, under a Purchase Agreement involving BofA Securities, Inc., is part of the company’s financial strategy. Analysts at BofA have reiterated their Buy rating for Crown Holdings, while Truist Securities maintains a Hold rating, reflecting varied perspectives on the company’s strategic moves. These developments underscore Crown Holdings’ focus on growth and operational efficiency.
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