Ardagh Metal Packaging Downgraded to Sector Perform, Shares Down 4%

RBC Capital downgraded Ardagh Metal Packaging (NYSE:AMBP) to sector perform from outperform and lowered its price target to $5 from $7. The company’s shares closed more than 4% lower on Friday.

The analysts believe investor sentiment will remain negative on the beverage can manufacture sector, particularly for the company, given its FX exposure, EMEA exposure, beverage category mix and net leverage of approximately 4.5x. The analysts mentioned they could get more constructive on the company if volumes grow above 3% and EBITDA margins grow through cost-cutting and pricing actions.

The analysts reduced their Q3/2022/2023 EBITDA estimates to $173 million/$680 million/$760 million from $179 million/$710 million/ $810 million. Their full 2022-year estimate of $680 million is below the company’s guidance of $710 million, mainly driven by FX headwinds (stronger US dollar), slowing demand/macro headwinds, and higher operating costs in Europe.