Ball, Crown Holdings rated Equal Weight in new coverage at Morgan Stanley

Ball (NYSE:BALL) and Crown Holdings (NYSE:CCK) on Monday were rated Equal Weight in new research coverage of paper and packaging stocks by analysts at financial-services firm Morgan Stanley. They said the companies are appropriately valued within an industry that they rate as In-Line with the broader market.

Ball’s (BALL) recent sale of its aerospace business means the maker of beverage cans will report lower earnings, and much of the decline can be offset with share buybacks and reduced interest expenses, “but we view its mid-single-digit earnings per share growth guidance as optimistic, and leaving limited room for error,” Pamela Kaufman, analyst at Morgan Stanley, said in a March 18 report.

Crown Holdings (CCK) is trading at a discounted enterprise value that’s 9.4 times earnings before interest, taxes, depreciation and amortization for 2024, which “seems to appropriately reflect several areas of uncertainty, including its exposure to weaker Southern European end markets, softer demand in Southeast Asia (10% of profits) and soft demand in its other business segments such as aerosol cans and can making equipment,” the report said.

Morgan Stanley also initiated coverage of Ardagh Metal Packaging (NYSE:AMBP) with an Underweight rating. The analysts said the company has some key revenue drivers, but also high debt and “significant” cash needs for dividends, interest expense and capital expenditures. In addition, its ownership structure limits liquidity, they said.