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Ball Corporation Is A Top Defensive Pick For Baird Analysts

Ball Corporation BLL has strong earnings prospects and increased transparency has boosted investor sentiment, Baird’s Ghansham Panjabi said in a report. He maintained an Outperform rating on the company, with a price target of $85.

Investor sentiment had been hurt by complications related to the simultaneous adding to and subtracting from Ball Corporation’s portfolio as well as concern over whether the projected $300 million in synergies was realistic, analyst Ghansham Panjabi mentioned.

After the 2Q16 earnings results, Ball Corporation’s shares rose due to greater confidence in the earnings and FCF forecasts post the three-year Rexam synergy period as well as increased transparency from management, Panjabi stated.

Considerable Value Creation Ahead

The analyst expressed optimism in the company being able to generate significant cash flow. Although the next few quarters are expected to be “noisy” on account of various restructuring charges and non-linear weighting of synergies, Ball Corporation appears to be on track to generating EBITDA of over $2 billion by 2019, with more than $1 billion in FCF.

“Further, share buybacks/dividend increases will likely follow starting in 2018 as previously outlined, underlying a compelling investment profile at current,” Panjabi commented. He terms Ball Corporation as a “Top Defensive Pick” and said that it was among “the most differentiated relative to the Packaging peer group.”

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