On Wednesday, Citi resumed coverage on Ball Corporation (NYSE:BALL) stock, assigning a Neutral rating to the stock with a price target set at $70.00. The firm highlighted Ball Corp 's recent portfolio streamlining efforts and the successful monetization of its Aerospace division, which resulted in net proceeds of approximately $4.5 billion. According to Citi, these moves could reduce Ball Corp's net leverage to 2.5 times by the end of 2024, marking the company's lowest leverage ratio in ten years.
Citi noted that the reduction in leverage might pave the way for Ball Corp to initiate over $3 billion in share repurchases between 2024 and 2026. Additionally, Citi acknowledged the stock's 16% increase over the past three months, suggesting that the expected low single-digit percentage volume growth, ongoing productivity improvements in beverage cans, and a significant reduction in share count—estimated at 291 million shares by the fourth quarter of 2024—are already reflected in the current stock price.
The firm also pointed out several upcoming discussions that could influence investor sentiment. These include the confirmation of Ball Corp's 2024 guidance, which anticipates a mid-single-digit percentage increase in earnings per share year-over-year and $500 million in adjusted free cash flow.
Moreover, a potential recovery in North American volume is anticipated after the company moves past a downturn in Bud Light sales this April. Lastly, Citi expects further insights into Ball Corp's long-term growth outlook to emerge at the Investor Day event scheduled for June.
Citi's analysis also includes an updated model for the supply and demand of beverage cans, providing a comprehensive view of Ball Corp's position within the industry. The price target of $70.00 represents a 7% expected total return based on the current trading levels of Ball Corp's stock.
InvestingPro Insights
As Ball Corporation (NYSE:BALL) navigates through its portfolio streamlining and the market reacts to Citi's coverage, real-time data and analysis from InvestingPro can offer additional context for investors. Ball Corp's market capitalization stands at a robust $20.92 billion, reflecting the company's significant presence in the industry. Despite a recent revenue contraction of 8.6% in the last twelve months as of Q4 2023, the company has demonstrated a strong gross profit margin of 19.03%, underlining its ability to maintain profitability.
InvestingPro Tips highlight that Ball Corp's stock is currently trading near its 52-week high, with a price that is 99.6% of this peak, and has experienced a large price uptick over the last six months, boasting a 38.74% return. This aligns with Citi's observation of the stock's 16% increase over the past three months. Moreover, the company's long-standing commitment to shareholder returns is reflected in its 52 consecutive years of dividend payments, with a current yield of 1.2% as of the last dividend ex-date on February 29, 2024.
For investors seeking a deeper dive into Ball Corporation's financial health and market performance, InvestingPro offers additional tips beyond those mentioned here. A subscription to InvestingPro provides access to a comprehensive suite of tools and analytics, including these tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of insights available to make informed investment decisions.
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