Ball Corporation’s shares surged as much as 6.8% on Friday after the Westminster-based aluminium can manufacturer reported better-than-expected earnings and revenue in the second quarter.

The leading beverage can maker reported earnings per share (EPS) of $0.86 on revenue of $3.46 billion, beating the Wall Street consensus estimates of $0.83 on revenue of $3.23 billion.

“With broad-based growth in categories including RTD and energy drinks, Ball Corporation (BLL) remains confident in the growth profile in NA from a pack mix shift despite some moderation of growth in hard seltzer. Further, with improved visibility on FCF generation, BLL intends to buy back ~$2.5 billion of stock from 2021-22,” noted Philip Ng, equity analyst at Jefferies.

Ball Corporation shares jumped over 5.5% to $85.24 on Friday. The stocks have lost over 8% so far this year.

Executive Comments

“The company is well-positioned for long-term growth and we recently accelerated return of value to shareholders in 2021 by increasing our dividend 33% and initiating share repurchases of at least $500 million. Our financial strength and flexibility provide the opportunity to return value to shareholders while also investing in excess of $1.5 billion in capital expenditures to further grow cash from operations, earnings and EVA dollars. We look forward to investing in more organic growth opportunities and returning even more to our shareholders in the future as our cash from operations continues to accelerate,” said Scott C. Morrison, executive vice president and chief financial officer.

“We continue to perform at a high level despite certain transitory inefficiencies and costs. Our talented team, Drive for 10 vision, enduring culture, capital allocation discipline and strong demand for our sustainable packaging and technologies will enable our long-term growth. In 2021 and beyond, we look forward to growing our cash from operations and EVA dollars on an even larger capital base while returning capital to our shareholders and exceeding our long-term diluted earnings per share growth goal of at least 10 to 15%,” Hayes said.

Story continuesBall Corporation Stock Price Forecast

Ten analysts who offered stock ratings for Ball Corporation in the last three months forecast the average price in 12 months of $100.22 with a high forecast of $120.00 and a low forecast of $85.00.

The average price target represents a 17.57% change from the last price of $85.24. From those 10 analysts, five rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $110 with a high of $134 under a bull scenario and $73 under the worst-case scenario. The firm gave an “Overweight” rating the aluminium can manufacturer’s stock.

Several other analysts have also updated their stock outlook. Baird slashed the stock price forecast to $85 from $95. Jefferies lowered the target price to $96 from $97. RBC cut the price objective to $100 from $113.

Analyst Comments

“2Q operating earnings generally came in-line with expectations. Despite concerns on the durability of beverage can demand, the growth story remains intact and Ball is accelerating capital return due to increased conviction in the outlook,” noted Neel Kumar, equity analyst at Morgan Stanley.

“Market leader with ~33% global share in the consolidated, growing, and non-cyclical beverage can industry. We expect Ball to benefit from a robust multiyear beverage can growth outlook in all its key regions. Near and long-term catalysts than can drive upside to estimates including substantial new capacity over the next several years to meet the significant acceleration in beverage can demand, commercial initiatives to improve price/mix, margin accretion from improving operating leverage, a rapidly growing backlog within its aerospace segment, and the new aluminum cup business.”

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This article was originally posted on FX Empire


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