UPDATE: Morgan Stanley Starts Ardagh Metal Packaging S.A. (AMBP) at Equalweight, 'Pure play in the global beverage can oligopoly'

Morgan Stanley analyst Angel Castillo initiates coverage on Ardagh Metal Packaging S.A. (NYSE: AMBP) with a Equalweight rating and a price target of $7.20.

The analyst comments "Initiating coverage of Ardagh Metal Packaging (AMBP) with an Equal-weight and a $7.20 price target as a decelerating macro and capital structure overhangs, in our opinion, could cap near-term upside from an otherwise attractive secular tailwind demand story. The smallest of the three major metal beverage can producers in the world, pure play Ardagh boasts the best sales and EBITDA percentage growth stemming from a more aggressive new capacity build out and the ongoing benefits of a tight and secularly growing aluminum can market. We think this is already priced into the shares as our base case EBITDA estimates imply a 2021-24 CAGR of ~15%, below consensus of ~17%. Share outperformance may be more dependent on a multiple re-rating, which we think could be hindered in the near to medium term by macro and capital structure overhangs such as: i) a relatively larger exposure to Europe (~45% of sales); ii) a higher reported leverage target range of 3.75-4.0x; iii) a low public float of ~25%; iv) the risk of dilution from earnouts and warrants in the future; and v) a rising rate environment. Net net we would expect shares to continue to trade at a discount to Ball and Crown."

For an analyst ratings summary and ratings history on Ardagh Metal Packaging S.A. click here. For more ratings news on Ardagh Metal Packaging S.A. click here.

Shares of Ardagh Metal Packaging S.A. closed at $5.86 yesterday.

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