-- Amcor's (AMCR) downgraded fiscal 2026 EPS and free cash flow guidance appear to be "stretch targets" amid a challenging macro environment, RBC Capital Markets said in a Wednesday note.
The company posted fiscal Q3 EPS of $0.96, which was slightly ahead of analysts' consensus and in-line with RBC's forecast, but it was boosted by lower-than-anticipated depreciation, interest, and tax expense of $43 million, according to the note.
Amcor downgraded fiscal 2026 EPS guidance by 2% and free cash flow guidance by 16%, but the Morgan Stanley analysts believe the targets to be on the ambitious side as the company requires EPS growth of over 20% to reach the mid-point of the range after delivering 6% EPS growth in fiscal Q3. It also needs $1.64 billion of free cash flow after achieving an outflow of $93 million in the first nine months, the note said.
The analysts said they remain "cautious" on the company due to the challenging consumer and rising raw material cost environment.
RBC maintained the company's stock rating at sector perform and price target at 58 Australian dollars ($41.97).
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