BofA Downgrades Amcor On Modest Relative Growth Prospects

Although Amcor PLC AMCR is a quality company and has performed well against expectations, its stock is likely to lag peers over the next few quarters, according to BofA Securities.

The Amcor Analyst: George Staphos downgraded Amcor from Neutral to Underperform, while maintaining the price target at $12.90.

The Amcor Thesis: The stock is a defensive one in a market that is “rotating to cyclicals” and is expensive versus peers, Staphos said.

“Our rating change has little if anything to do with the company’s performance relative to our expectations or its quality - indeed, we raised our estimates following F1Q (September),” he wrote in a note.

Amcor is expected to achieve volume growth of merely 0%-1% in 2021, versus an average of 3% for the overall packaging segment. “Additionally, plastic packaging companies continue to face headline risks with sustainability and we do expect inflation to create some temporary margin compression,” the analyst said.

AMCR Price Action: Shares of Amcor had risen by 1.1% to $11.71 at the time of publication Tuesday.