Stifel upgrades Amcor stock to Buy as merger synergies reset expectations

Investing.com - Stifel upgraded Amcor Plc. (NYSE:AMCR) from Hold to Buy while adjusting its price target to $10.20 from $10.83 on Friday. The stock, currently trading near its 52-week low of $7.81, has caught analysts’ attention despite its relatively high P/E ratio of 25x.

The upgrade follows the April 30, 2025 merger between Amcor and Berry, which created a consumer packaging company with combined revenues of $23 billion. The merged entity, with a current market capitalization of $18.3 billion and an impressive dividend yield of 6.52%, maintains a strong track record of raising dividends for six consecutive years. According to Stifel, the company expects to generate cost synergies of $530 million, growth synergies of $60 million, and financial synergies of $60 million from the merger. InvestingPro analysis reveals 8 additional key insights about Amcor’s financial health and growth prospects.

Stifel noted that while delivering the promised synergies to the bottom line will be challenging and accelerating organic growth seems optimistic given both companies’ history of minimal growth, recent weak performance has appropriately reset expectations.

The firm views the purchase multiple in the mid-7x next twelve months EV/EBITDA as reasonable and considerably below Amcor’s historical multiple of 10.4x.

Stifel projects total cost synergies of $355 million will materialize through 2028, driving margin expansion, improved free cash flow, and a 9% adjusted earnings per share compound annual growth rate from 2025 to 2028.

In other recent news, Amcor reported its fourth-quarter earnings for 2025, revealing mixed results. The company posted earnings per share of $0.20, slightly below the forecast of $0.21, and reported revenue of $5.08 billion, falling short of the expected $5.18 billion. In leadership changes, Amcor announced the appointment of Stephen R. Scherger as its new Executive Vice President and Chief Financial Officer, succeeding Michael Casamento. Scherger previously held the same position at Graphic Packaging.

Analysts have also weighed in on Amcor’s performance and prospects. RBC Capital initiated coverage with a Sector Perform rating, highlighting potential synergies with Berry, while JPMorgan began coverage with an Overweight rating, citing strong cash flow. Jefferies reiterated its Buy rating, noting a 10% free cash flow yield despite weaker volumes in North America. These developments indicate varied analyst perspectives on Amcor’s future performance.

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