Ball Corp (BALL) has been rated "Neutral" by Citi, with a revised target price of $55, down from $59, following a disappointing Q4 performance where North American volumes fell mid-single digits y/y. The report highlights skepticism around management's optimistic 2-3% volume growth assumptions for North America, which underpin their EPS guidance. Citi's target price is based on an 11x multiple of next twelve months (NTM) EBITDA, reflecting a reduced premium over Crown Holdings (CCK) due to comparable 2025 volume growth guidance and EBITDA margins.
The report centers on Ball's strategic moves, including the surprise investment in a new facility in Oregon and the acquisition of Florida Can, which is seen as a strategic fit. These initiatives are expected to ramp up capacity by approximately 3 billion units from 2025 to 2027, marking a 600 basis point increase in supply compared to the 2024 baseline. Despite these expansions, Citi remains cautious, noting, "Investors are potentially skeptical of +2-3% vol growth assumptions underpinning EPS guidance."
Citi has adjusted its model, raising 2025-2027 EPS estimates due to a lower share count and interest expense, although underlying EBITDA is expected to fall by 1-2% due to lower base volume growth in North America. The current price of Ball Corp is $51.90, reflecting a slight increase of 0.12% from the previous close.