CHESS Depositary Interests (CDI) in Amcor (ASX: AMC) may follow a fall in the United States-focused packaging giant’s shares on the NYSE (NYSE: AMCR) overnight after it reported quarterly results that under-delivered on analyst expectations.
The group reported sales of US$3.33 billion, slightly shy of US$3.47 billion estimates.
This translated to earnings per share (EPS) of US$0.14, US$0.05 worse than the $0.19 analysts were expecting.
The group declared a quarterly cash dividend of US12.75 cents for U.S. investors and an unfranked 19.97 cent dividend for Australian shareholders which will be paid 10 June.
Merger is a done deal
However, the stock’s underwhelming quarterly results – including lower than expected net sales in its flexibles and rigid packaging arm – may be eclipsed by revelations that the significant merger with Berry Global is now complete.
With the share price down -5.35% in the last 3 months and down -5.92% in the last 12 months, Amcor’s CEO Peter Konieczny did his best to frame the transformational merger with Berry Global as a “defining day” for the stock.
The all-stock combination is expected to enhances Amcor's standing as a leading entity in the consumer and healthcare packaging sectors, equipped with advanced material science and innovation capabilities.
What should excite the market is the prospect of $650 million in expected synergies that the merger opens up.
The company aims to drive consistent growth and enhanced profitability by refining its portfolio and improving its market offerings.
“Through this combination, Amcor has enhanced positions in attractive categories, a broader, more complete customer offering and expanded material science and innovation capabilities,” said Konieczny.
US$260m synergies in FY26
In FY26, before growth in the underlying business is taken into account, Amcor expects to deliver US$260 million of pre-tax synergies alone, resulting in adjusted EPS accretion of around 12%.
Meanwhile, Berry Global, a company involved in the manufacturing sector – which has now been delisted from NYSE - delivered a solid second quarter result, with all three segments delivering positive volumes and driving 2% overall organic volume growth in the quarter.
Based on the one-year price targets offered by 9 analysts in the U.S., the average target price for Amcor PLC (AMCR, Financial) is US$11.27 with a high estimate of US$13.00 and a low estimate of US$10.00.
The average target implies an upside of 22.52% from the current price of US$9.20.
Amcor has an (ASX) market cap of A$9.4 billion making it the main board’s 59th largest stock; the share price is up 1% over one year and down 2.4% year to date.
The share price closed at A$14.60 yesterday.
The stock’s shares appear to be in a near-term downtrend confirmed by its 20-day moving average.
Consensus is Moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
