Extreme energy cost increases, euro depreciation, and Eastern Europe volume losses, are weighing on Amcor’s outlook. Despite guiding to being price-cost positive by financial year-end, Credit Suisse notes this is subject to commodity prices that have continued to rise.
Amcor is not sizeably exposed to energy pricing, and the company is expected to pass higher costs through. Credit Suisse estimates a 2-3% price increase would be required to recover costs at current spot pricing. Earnings per share estimates decline -1-4% through to FY24.
The Neutral rating is retained and the target price decreases to $16.00 from $17.50.
Sector: Materials.
Target price is $16.00.Current Price is $15.02. Difference: $0.98 – (brackets indicate current price is over target). If AMC meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
