Analyst Downgrades Berry Global: Is the Center of the Aisle Falling Out?

RBC Capital Markets analyst Arun Viswanathan downgraded Berry Global Group, Inc. BERY to Sector Perform (from Outperform) and cut the price target to $62.00 (from $72.00).

Although the analyst notes that the company is executing well on cost initiatives and generating FCF, he expects volumes to continue to be challenged in the near term and net price may be a headwind in the first half of FY24.

Viswanathan says low-single-digits volume growth is still possible but cautious in the near term, given customers moving away from the center of aisle products and weak European/Industrial demand.

Overall, the analyst specifies investors were hopeful that an outright sale of HH&S would have removed some capital intensity from BERY and put EBITDA growth back on track after the segment failed to deliver the mid single digits percentage growth expected when it was acquired in 2015. 

Viswanathan estimates adjusted EPS of $7.45 in 2024 and $8.25 in 2025.

Price Action: BERY shares are trading lower by 0.60% at $59.60 on the last check Friday.