Soft Volumes Expected in Fiscal 2022 for Amcor With Pandemic Pantry Stocking a Thing of the Past

We expect a softer organic performance from Amcor in fiscal 2022 as consumers begin to venture out once more, driving at-home consumption patterns toward more normalised pre-pandemic levels. Nonetheless, with the headwind posed to organic volume growth a transitory one, we make no change to our long-term outlook for the narrow-moat stock. Amcor is guiding to EPS growth of 7%-11% in fiscal 2022, implying an EPS guidance range of USD 79 cents-USD 81 cents. Despite our glum outlook for volumes in fiscal 2022, we forecast EPS of USD 81 cents--at the top end of Amcor’s EPS guidance range--owing to a combination of a final instalment of Bemis synergies, better fixed cost recoveries and a reduced share count owing to Amcor’s freshly announced share buyback programme. A time value of money adjustment sees us lift our fair value estimate by 1.5% to AUD 16.70 per share. Amcor shares screen as modestly overvalued relative to our revised valuation.