AMCR: Takeaways from Wells Fargo Industrials & Materials Conference

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AMCR: Takeaways from Wells Fargo Industrials & Materials Conference

Containers & Packaging Equity Research

Investment Thesis, Valuation and Risks

Amcor PLC (AMCR)

Investment Thesis

While the merger of AMCR with BERY offers longer-term synergy potential and increased scale, we believe investor focus remains heavily

on the near-term risks. Elevated leverage, challenged volume fundamentals and weaker YTD earnings quality—supported more by FX and

tax than core operations—temper the outlook. Cash flow targets are also being impacted by higher resin costs + inventory needs on top of

consumer-driven volume headwinds, which further pressures the risk-reward. We rate AMCR EW.

Target Price Valuation for AMCR

Over the past five years, AMCR has traded at an avg EV/EBITDA multiple of 11.6x and an average FCF yield of 5.4%. Our $41 PT is based

on our view of a normalized trading multiple for AMCR at 8.5x EBITDA using our FY2027 estimates, or an 8.9% FCF yield. We note this

multiple is modestly below the low-end of AMCR's historical range of 9.5-11.0x owing to the merger with Berry, which traded at a historical

EBITDA multiple range of 7.0-9.0x and accounts for low consumer spending and rising resin.

Risks to Our Price Target and Rating for AMCR

Upside risks: 1) Improved prices or availability of critical raw materials such as resins, films, aluminum & chemicals; and 2) Smoother-than-

expected execution of the BERY integration.

Downside risks: 1) Sustained volume declines leading to further capacity curtailments; 2) New EPR legislation driving higher costs, product

displacement, and reduced volumes; 3) FX headwinds; and 4) Escalation of geopolitical tensions negatively impacting input costs and

consumer confidence.

Companies Mentioned in Report

Company Name Ticker Last Price