Monday, Morgan Stanley initiated coverage on Ball Corporation (NYSE:BALL), a leading player in the beverage can industry, with an Equalweight rating and a price target of $68.00. The firm noted Ball Corp 's dominant position, holding approximately 26% of the global market share in a consolidated and defensive sector.
The analyst highlighted several factors that could potentially enhance the company's earnings, including the sustainability benefits that may boost global demand for beverage cans, as well as inflation and cost recovery efforts that could lead to margin expansion.
Furthermore, the recent sale of Ball Corp's Aerospace division is expected to improve the company's capital structure, enabling it to reduce net debt to below 3 times EBITDA and to return around $2 billion to shareholders through stock repurchases.
Despite these positive drivers, the firm cautioned that Ball Corp might experience short-term volume declines due to weak consumer demand and its exposure to the beer market, which is facing long-term challenges.
The price target of $68 is based on a 13 times multiple of the company's estimated 2024 EBITDA, which is a slight premium over Ball Corp's 10-year trading average. This premium is justified by the company's improved financial leverage following its business divestiture.
Morgan Stanley's analysis suggests a relatively balanced risk-reward scenario for Ball Corp, with a potential upside of 38% and a downside of 36%. The assessment reflects both the opportunities and risks associated with the company's current market position and strategic initiatives.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.