UPDATE: Citigroup Initiates Berry Plastics at Buy on Cash Flow Yield, Margin Profile

Citigroup initiated coverage on Berry Plastics (NYSE: BERY) with a Buy rating and an $18 price target. Citigroup noted, "BERY trades at a 11.7% 2013 FCF yield, almost 400bp higher than its peers. The company is set to reap the cash benefits of recently completed restructuring in 2013, and we expect free cash flow to grow at a 25% CAGR rate from 2012-14. From YE 2012-14 net debt-toEBITDA should fall from 5.1x to 4x, with the value accruing to equity holders. … BERY's EBITDA margins are 110bp higher than its peer group, while its core Rigid Plastics business demonstrates GDP+ volume growth rates that are among the most attractive in the industry. We expect CAGR sales growth of 3% from 2011-14 driven mostly organically; BERY should further benefit from a modest resin price environment next year. "Berry Plastics closed at $13.88 on Monday.