What happened
In a fine end to its trading week, Ball Corporation (BALL +1.66%) stock flew higher on Friday after an analyst upgraded his recommendation. The food packaging -- canning, to put it another way -- specialist's share price defied gravity by more than 3%, on a day when the bellwether S&P 500 index stumbled to a 0.3% decline.
So what
The party doing the upgrading was Jefferies. Well before market open, prognosticator Philip Ng changed his recommendation on Ball stock to buy from hold. In doing so, he added $1 per share to his price target for a new level of $64. That implies significant upside of almost 30% to the current share price.
In his research note heralding the upgrade, Ng wrote, "With the multiple rebasing back to pre-2019 levels, [free cash flow] reaccelerating, and fundamentals at a trough, we find the risk:reward attractive."
The analyst also waxed bullish about Ball's sale of its Ball Aerospace unit, which the company agreed last month to sell to defense sector mainstay BAE Systems for $5.6 billion. Those proceeds should help the company fund stock buybacks next year, Ng believes. This follows Ball's pronouncement that it would return capital via both buybacks and dividends.
NYSE: BALL
Key Data Points
Now what
Investors are also likely cheered by the fact that Ball is slimming down with the sale of the aerospace operation. It wasn't necessarily a good fit with its canning activities, and the divestment will help the company focus more on its core competency.
