At Orora's investor day, management highlighted M&A opportunities would be most likely to be explored in North America, and noted attractiveness in the healthcare and technology sectors. However, valuations are currently stretched.

Orora has had an inconsistent record of acquisitions in the US, and Morgan Stanley had previously been cautious about potential M&A. But the company's new methodology focuses on integration of acquired businesses and is demonstrating recent success.

The broker sees Orora as a solid defensive exposure with a robust balance sheet, support from capital management and a 4% dividend yield, but prefers Amcor ((AMC)) in the space.

Equal-weight and $3.80 target retained. Industry view: In-Line.

Sector: Materials.

Target price is $3.80.Current Price is $4.00. Difference: ($0.20) - (brackets indicate current price is over target). If ORA meets the Morgan Stanley target it will return approximately -5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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