Last Update 03 Dec 25

AMCR: Future Returns Will Be Driven By Berry Synergies And Free Cash Flow

Analysts have trimmed their price target on Amcor to $10.00 from $11.10, reflecting slightly higher discount rate assumptions and a modestly lower future P/E multiple, while still pointing to improving margins, robust free cash flow and sizable Berry Global synergy potential as support for long term value.

Analyst Commentary

Street research on Amcor reflects a mix of optimism about long term value creation from the Berry Global acquisition and caution around near term operational and balance sheet risks. Recent notes highlight diverging views on how quickly the company can unlock synergies and re rate its valuation amid a challenging demand backdrop.

Bullish Takeaways

Bullish analysts see Amcor as a leading global packaging platform that can leverage scale and the Berry Global integration to drive structural margin expansion and earnings growth over the medium term.
Synergy targets ranging from about $590M to $650M over three to four years are viewed as achievable, with upside to free cash flow and return on invested capital if integration execution remains disciplined.
Valuation is considered supportive, with upside potential implied by select price targets that assume a successful delivery of cost savings and cash generation despite current market skepticism.
Free cash flow generation targets are characterized as manageable, supporting deleveraging, continued investment in growth, and ultimately a rerating toward higher P E multiples once synergy milestones are met.

Bearish Takeaways

Bearish analysts expect the share price to remain constrained in the near term as packaging volumes continue to decline, limiting organic top line momentum and near term operating leverage.
Heightened debt levels following the Berry Global acquisition are flagged as a key risk, with concerns that slower than expected integration or weaker demand could cap valuation until leverage trends clearly improve.
Some research frames the current discount as warranted given execution risk around large scale synergy delivery, warning that any delays or cost overruns could pressure both earnings and investor confidence.
Uncertain macro conditions and persistent industry headwinds are seen as potential obstacles to a smooth recovery in volumes, delaying the timeline for the market to fully reflect Amcor's targeted earnings and cash flow profile.

What's in the News

Amcor announced the Amcor Lift Off Winter 2025/26 Challenge, inviting start ups worldwide to co develop home compostable adhesives, advanced compostable oxygen barrier coatings and nature based barrier additives for flexible and paper based packaging, with potential joint development and investment of up to $500,000 for selected participants (company announcement).
Shareholders approved an amendment to Amcor plc's Memorandum of Association to implement a reverse stock split at the November 6, 2025 AGM, following an earlier proposal outlining the same change (AGM documentation).
Amcor declared a higher quarterly cash dividend of 13.0 cents per share, up from 12.75 cents in the prior year quarter, payable on December 17, 2025 to shareholders of record on November 28, 2025 (dividend announcement).
The company reaffirmed its earnings guidance for fiscal 2026 and for the first quarter of fiscal 2026, maintaining the outlook previously provided with fourth quarter and full year 2025 results (guidance update).
Amcor appointed Stephen R. Scherger as Chief Financial Officer, effective November 10, 2025. He succeeds long serving CFO Michael Casamento, who will remain as an advisor through June 30, 2026 to support the transition (management announcement).

Valuation Changes

Fair Value: Unchanged at approximately $10.41 per share, indicating no revision to the long term intrinsic value estimate.
Discount Rate: Risen slightly from about 7.58 percent to 7.60 percent, reflecting a modestly higher required return and risk assumption.
Revenue Growth: Risen slightly from roughly 11.29 percent to 11.31 percent, implying a marginally more optimistic top line outlook.
Net Profit Margin: Risen modestly from about 6.84 percent to 7.07 percent, signaling slightly improved expectations for long term profitability.
Future P/E: Fallen slightly from around 22.31x to 21.58x, pointing to a somewhat lower assumed valuation multiple on future earnings.

Strategic acquisitions, portfolio optimization, and sustainability initiatives strengthen market position, margin expansion, and consistent earnings growth.
Broadened footprint in high-growth regions and markets enables Amcor to capture rising demand and evolving industry trends.
Weak consumer demand, portfolio uncertainty, and high leverage constrain growth, margin expansion, and financial flexibility while increasing risks around asset sales and shareholder returns.

Catalysts

About Amcor

Develops, produces, and sells packaging products in Europe, North America, Latin America, and the Asia Pacific.What are the underlying business or industry changes driving this perspective?

The integration of Berry Global with Amcor is expected to yield $650 million in synergies by fiscal 2028 (with $260 million in fiscal 2026), primarily through cost reduction, procurement optimization, and operational efficiencies, which should support sustained EPS and margin expansion.
Amcor's enhanced geographic exposure in Asia-Pacific and Latin America, combined with a strategic focus on high-growth health and nutrition end markets, positions the firm to capitalize on increasing demand from a rising global middle class and urbanization, likely benefiting future revenue growth.
The company's leadership and continued investment in sustainable, recyclable, and reusable packaging solutions aligns Amcor with strengthening regulatory and consumer demand for eco-friendly products, enabling market share gains and price premiums, supporting both revenue and margin improvement.
Ongoing portfolio optimization, with planned divestiture or restructuring of lower growth or less scalable businesses, will increase the company's exposure to stable, higher-growth sectors, enhancing the consistency and quality of earnings and free cash flow.
The combined product and technology portfolio following the Berry acquisition allows Amcor to address evolving e-commerce and home delivery trends, offering advanced packaging solutions suited to these markets, which can drive incremental volume and revenue opportunities over the medium to long term.

Amcor Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Amcor's revenue will grow by 17.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.4% today to 7.0% in 3 years time.
Analysts expect earnings to reach $1.7 billion (and earnings per share of $0.72) by about September 2028, up from $510.0 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $1.9 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.5x on those 2028 earnings, down from 37.0x today. This future PE is greater than the current PE for the AU Packaging industry at 22.2x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.45%, as per the Simply Wall St company report.

Amcor Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent volume declines and ongoing weak consumer demand in major segments, particularly North America, raise concerns about the company's ability to return to organic revenue growth, limiting top-line expansion and potentially pressuring earnings if secular consumption trends remain subdued.
The North American beverage business, now identified as non-core and underperforming with operational challenges and elevated costs, represents a significant drag on net margins and earnings, with uncertainty surrounding the timing and terms of any divestiture.
Approximately $2.5 billion of annual sales (including 10 businesses plus North American beverage) are under portfolio review due to low growth, margin, scale, or unfavorable industry structure, increasing the risk of asset sales at discounted valuations or restructuring costs that could negatively impact future profitability.
Even with targeted synergy capture from the Berry Global acquisition, Amcor is relying on "self-help" actions to drive earnings growth amid expectations for flat volumes, suggesting limited margin expansion if integration targets are not fully met or if synergy realization is slower or costlier than planned.
High leverage (3.5x, above stated target range), increased capital expenditure, and the prioritization of deleveraging over growth investments or buybacks constrain financial flexibility, and could delay shareholder returns if cash flows fall short, asset sale proceeds are less than anticipated, or macro conditions worsen.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $10.91 for Amcor based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $24.3 billion, earnings will come to $1.7 billion, and it would be trading on a PE ratio of 22.5x, assuming you use a discount rate of 7.4%.
Given the current share price of $8.19, the analyst price target of $10.91 is 24.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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