Monday, Morgan Stanley (NYSE:MS) upgraded Crown Holdings (NYSE:NYSE:CCK) stock from Equalweight to Overweight.
The upgrade comes despite the recent 15% dip in the company's shares over the last three months, which analysts at Morgan Stanley view as an opportunity for investors.
The firm believes the decrease in share price presents an attractive entry point. It anticipates Crown Holdings to continue its progress in reducing debt, increase returns to shareholders, and achieve high-single-digit earnings per share growth in 2025.
The positive outlook is supported by a number of factors identified by the analysts.
Crown Holdings is expected to benefit from a favorable product mix in North America, with more carbonated soft drink (CSD) packaging and less beer packaging. Additionally, the company's beverage can margins and return on net operating assets are seen as the strongest among its peers in the beverage can production industry.
Morgan Stanley also notes Crown Holdings' exposure to markets in Asia and Transit packaging as potential areas for growth. The firm suggests that consensus expectations have not fully accounted for the possible year-over-year improvements in these markets, presenting Crown Holdings as an advantageous option for investors looking to capitalize on these upside risks.
The firm adjusted the price target to $105 from $109 based on analysis that indicates that while consensus expectations may be conservative, Crown Holdings offers a unique avenue to benefit from potential positive developments in the Asian and Transit packaging markets. These opportunities are not factored into Morgan Stanley's base case, suggesting additional potential for the stock's performance.
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