Credit Suisse raises the target to $16.25 from $15.50, suspecting there could be more consensus upgrades. Falling raw materials prices could stimulate some new volume and underpin profit.
Nestle has stated an aim to reduce its reliance on virgin plastic with a commitment to make 100% of packaging recyclable or reusable by 2025. Credit Suisse notes Amcor has the capability to produce packaging from either recycled or virgin resin.
The broker points out a distinction must be made between flexibles and rigid packaging, assessing recycled resin for flexibles is a very thin market.
The broker cannot immediately evaluate the impact of Nestle’s announcement but assumes Amcor’s volumes do not decline over time. Outperform maintained.
Target price is $16.25.Current Price is $15.56. Difference: $0.69 – (brackets indicate current price is over target). If AMC meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).