Crown Holdings stock rating reiterated at Buy by Citi ahead of earnings

Citi reiterated a Buy rating and $129 price target for Crown Holdings (CCK), anticipating the company will exceed Q2 earnings estimates with $1.90 EPS and potentially raise its 2025 guidance, driven by robust North American demand and overall volume growth. Despite its strong year-to-date performance and trading near a 52-week high, CCK is considered undervalued at 9.2x next-twelve-months EBITDA, below its historical average. While the company also announced key leadership changes, Baird recently downgraded CCK to Neutral, suggesting the market has largely recognized its operational improvements.

Analysis

Crown Holdings (CCK) presents a bullish outlook ahead of its second-quarter earnings, underpinned by a reiterated Buy rating and a $129.00 price target from Citi. The positive sentiment is fueled by expectations of an earnings beat, with Citi forecasting Q2 EPS of $1.90 versus a $1.88 consensus, and supported by five recent upward earnings revisions from analysts. This optimism is grounded in strong fundamental performance, including a 6.4% year-over-year increase in U.S. can demand and projected total company volume growth of 3.7%. Consequently, Citi anticipates CCK may raise its full-year 2025 EPS guidance to a $7.00-$7.25 range and increase its free cash flow guidance to approximately $825 million. Despite a 29.18% year-to-date return and trading near its 52-week high, the stock's valuation remains attractive, trading at 9.2x next-twelve-months EBITDA, a slight discount to its 10-year average of 9.4x. However, this bullish view is tempered by a recent downgrade from Baird to Neutral, which argues that the company's operational improvements are already priced into the stock. The company has also announced several senior leadership changes effective July 2025, aimed at sustaining growth, while noting that potential tariff impacts are manageable at less than $30 million.

Key Decisions for Investors

• Investors may consider the current valuation a compelling entry point, as the stock trades at a discount to its historical average despite strong volume momentum and the potential for a positive earnings surprise and guidance raise.
• It is crucial to weigh the risk highlighted by Baird's downgrade, which suggests the significant year-to-date rally may have already captured the upside from recent operational improvements, potentially limiting further near-term gains.
• The upcoming Q2 earnings report serves as a key catalyst; confirmation of an EPS beat and an upward revision to full-year free cash flow and EPS guidance would be critical to validating the bullish thesis.
• Monitor the execution of the new leadership team post-July 2025, as their ability to maintain growth momentum and manage costs will be vital for the company's long-term performance.