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Investing.com - Wells Fargo (NYSE:WFC) initiated coverage on Amcor Plc. (NYSE:AMCR) with an overweight rating and a $10.00 price target on Thursday. The company, which boasts a notable 5.64% dividend yield and has raised its dividend for six consecutive years according to InvestingPro data, continues to attract investor attention.
The investment bank cited the recent combination of Amcor and Berry Global as creating "a global packaging powerhouse with unmatched scale and innovation leadership" in its research note.
Wells Fargo expects Amcor’s earnings growth to be primarily driven by synergies over the next two years following the merger, which positions the company as a leader in the packaging industry.
The firm also highlighted that increased free cash flow could provide long-term flexibility between enhanced shareholder returns and potential bolt-on acquisitions for the packaging company.
Wells Fargo set its price target of $10.00 based on 9.1 times its fiscal year 2026 estimated EBITDA, with earnings per share estimates of $0.72 for fiscal year 2025 and $0.90 for fiscal year 2026.
In other recent news, Amcor plc has reported lower-than-expected earnings and revenue for its fiscal third quarter, coinciding with the completion of its merger with Berry Global. The company announced adjusted earnings per share of $0.18, falling short of analyst estimates of $0.19, and revenue of $3.33 billion, which was below the consensus forecast of $3.49 billion and represented a 2% year-over-year decline. Despite these figures, Amcor’s CEO, Peter Konieczny, described the merger as a "defining day" for the company, enhancing its market position and expanding its capabilities. For the first nine months of fiscal 2025, Amcor’s net sales were $9.93 billion, a 2% decrease year-over-year, while adjusted EBIT increased by 3% on a comparable constant currency basis to $1.11 billion.
Following the merger, Moody’s Ratings upgraded Berry Global’s senior unsecured notes to Baa2 from Ba1, reflecting the parent guarantee provided by Amcor. The merger has positioned Amcor as the largest plastic packaging company in the industry, with a revenue scale of $24 billion. The integration is expected to improve Amcor’s EBITDA margin and cash flow generation due to cost synergies and benefits of scale. Amcor has narrowed its fiscal 2025 adjusted EPS guidance to $0.72-$0.74 and expects adjusted free cash flow of $900 million to $1 billion. The company has also increased its quarterly dividend to 12.75 cents per share, up from 12.5 cents last year.
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