UPDATE: BMO Capital Upgrades Crown Holdings (CCK) to Outperform as Analyst Sees Upside Break Out
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(Updated - September 27, 2016 8:51 AM EDT)
BMO Capital upgraded Crown Holdings (NYSE: CCK) from Market Perform to Outperform with a price target of $65.00 (from $56.00). Analyst Mark Wilde thinks shares are set to break out to the upside.
Wilde summarized the upgrade, stating, "Crown is trading at an unusually wide discount to Ball. Crown is deleveraging following two large acquisitions and should resume returning excess cash to shareholders in 2017. Earnings and cash flow should benefit from a wave of domestic and offshore expansion projects. Finally, risks from the Ball/Rexam combination appear skewed to the upside for CCK. We're raising our rating to Outperform and target to $65/share from $56. Our target is based upon a 10.4x multiple on 2017E EBITDA."
"With the Mivisa (2014) and EMPAQUE (2015) acquisitions now fully absorbed, Crown’s management can focus on performance in its core operations. Moreover, with 6/30/16 net debt/EBITDA at 3.7x and heading south, we expect CCK will resume returning cash to shareholders by mid/late 2017," added the analyst. "Crown already has an impressive emerging markets footprint, with solid #1 positions in high growth markets such as Mexico, Turkey, and Southeast Asia. Over the next 12-18 months, Crown should see gradual benefit from new facilities/lines opening around the world, most in high growth regions."
Shares of Crown Holdings closed at $53.90 yesterday.
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