UPDATE: Citi Downgrades Ball Corp (BLL) to Neutral

Citi analyst Anthony Pettinari downgraded Ball Corp (NYSE: BLL) from Buy to Neutral with a price target of $105

The analyst comments "We expect BLL will guide to exceed its 10-15%+ annual EPS growth target (vs. cons. +19% Y/Y) & capex of ~$1.4B. We forecast total company bev can vols +6.7% Y/Y with +MSD vol growth in EMEA & NA along with +low-DD vol growth in South America. We are modestly higher than cons. for ’22 EPS (Citi $4.24 vs. cons. $4.07) despite being roughly in-line on EBITDA as we forecast ~$1.75B in repurchases, consistent with BLL’s plans to return ~$2B to shareholders in ’22. Bev can leaders BLL & CCK are trading at a - 1.9x discount on NTM EBITDA to beverage customers (ABI, CARL, KO, MNST, PEP, SAM & TAP), a significant narrowing of the historic discount vs. 10-year (-4.6x) & 5-year averages (-4.0x). The canmakers are now trading at a +1.9x premium to beer customers vs. the 5-year avg. discount of -0.9x. Canmakers are further trading at a -6.2x discount vs. CSD customers compared the 5-year avg. discount of -5.6x. We attribute the delta in beer vs. CSD to share losses amongst mass beer companies, while major CSD producers continue to innovate (seltzer, energy, etc.). While narrowing the valuation gap with key customers makes sense given share gains in bev cans & recent preference for at-home consumption, we think further multiple expansion may be somewhat capped by rising rates, as well as the potential impact of new market entrants, decelerating growth for categories like hard seltzer & potential share stabilization as off-premise consumption continues to recover. Accordingly, we’re moving from Buy to Neutral on BLL with a $105 TP."

For an analyst ratings summary and ratings history on Ball Corp click here. For more ratings news on Ball Corp click here.

Shares of Ball Corp closed at $93.26 yesterday.

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