Monday, Citi resumed coverage on Berry Global Group (NYSE:BERY) stock, a manufacturer of plastic packaging products, with a Neutral rating and a price target of $76.00. The resumed coverage follows Berry Global's announcement of a merger agreement with Amcor (NYSE:AMCR), a global packaging company. According to the terms of the agreement, Berry Global shareholders will receive 7.25 shares of Amcor for each share of Berry Global they own.
The deal between Berry Global and Amcor is anticipated to be finalized by mid-2025. The value of the transaction for Berry Global shareholders is based on Amcor's intra-day trading price as of last Friday, which was $10.45 per share. This valuation translates to a $76 value for Berry Global shares.
As of today, Berry Global's stock is trading at approximately a 7% discount to the $76 target price set by Citi, excluding dividends. This discount suggests that the stock is currently trading at what Citi considers a roughly fair valuation in relation to the proposed merger terms.
The merger is expected to create a combined entity that will leverage the strengths of both Berry Global and Amcor. Shareholders of Berry Global are poised to become part of a larger organization upon the completion of the transaction, which remains subject to customary closing conditions and regulatory approvals.
In other recent news, Berry Global Group reported better-than-expected fourth-quarter earnings, with an adjusted earnings per share of $2.27 and revenue of $3.17 billion, surpassing analyst consensus estimates. The company has also entered into a definitive merger agreement with Amcor Plc, a significant move as both companies are notable players in the packaging industry. This all-stock transaction is expected to close by mid-2025, with Berry Global shareholders receiving 7.25 shares of Amcor for each share of Berry Global they own.
JPMorgan (NYSE:JPM) reinstated coverage on Berry Global Group, assigning an Overweight rating and establishing a price target of $76.00. This follows the company's announcement of its merger with Amcor, which is anticipated to value Berry's stock at approximately $73.59 per share. RBC Capital Markets and Baird also adjusted their price targets to $73 and $70, respectively, in light of the merger.
For fiscal 2025, Berry Global forecasts an adjusted EPS in the range of $6.10 to $6.60, despite falling short of consensus estimates. Investors remain encouraged by the company's outlook for continued low-single digit volume growth and strong free cash flow generation. These are part of the recent developments in the company's operations.
InvestingPro Insights
As Berry Global Group (NYSE:BERY) navigates its merger with Amcor, InvestingPro data provides additional context to Citi's valuation. The company's current P/E ratio of 16.01 and adjusted P/E ratio of 12.29 for the last twelve months suggest a relatively modest valuation, which aligns with Citi's Neutral rating.
InvestingPro Tips highlight Berry Global's financial strength and shareholder-friendly policies. The company has raised its dividend for 3 consecutive years, demonstrating a commitment to returning value to shareholders. This trend could be particularly relevant for investors considering the upcoming merger and its potential impact on future dividends.
Additionally, Berry Global's stock is trading near its 52-week high, with a price that is 98.91% of its peak. This proximity to the high point, combined with Citi's $76 price target, suggests that the market is pricing in much of the anticipated merger value.
For investors seeking a deeper understanding of Berry Global's prospects, InvestingPro offers 5 additional tips that could provide valuable insights into the company's financial health and market position as it approaches this significant corporate event.
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