ASX materials stock Orora Ltd (ASX: ORA) was drawing plenty of attention last week after a trading update highlighted challenging operating conditions stemming from the ongoing conflict in the Middle East.
The company is a global packaging and distribution business.
Investors were heavily exiting their positions in Orora shares following the release of a trading update.
Most notably, the update included a downgrade to earnings expectations for its Saverglass business.
According to the release, Orora now expects FY 2026 underlying EBIT for Saverglass to be in the range of 63 million euros to 68 million euros. This is down from previous guidance of broadly in line with FY 2025 EBIT of 79.2 million euros.
On a reported basis, EBIT is expected to fall further to between 52 million euros and 59 million euros.
Orora shares fell 25% across Thursday and Friday last week following the announcement.
Its share price is now down approximately 33% in 2026.
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Middle East conflict weighing heavily on sentiment
According to new guidance out of Morgans, the Middle East conflict has affected operations both directly and indirectly: directly through the effective closure of ORA's Ras Al Khaimah (RAK) facility in the UAE, and indirectly through lower spirits volumes and an adverse product-mix shift, which have weighed on earnings.
As a result, the broker has adjusted FY26/27/28F underlying EBIT by -8%/-11%/-10% for this ASX materials stock.
Given the ongoing uncertainty surrounding the conflict in the Middle East, visibility on the timing of a potential restart at the RAK facility remains limited. In addition, global consumer confidence and spirits demand have already been negatively affected by the conflict and may remain subdued for some time, even in the event of a near-term resolution.
Target price decreases – opportunity elsewhere says Morgans
Based on this guidance, Morgans reduced its price target to $1.55 (previously $2.30) for this ASX materials stock.
It maintained its hold rating.
From last week's closing price of $1.48, this price target indicates an upside of roughly 5%.
The broker also noted that there is better opportunity elsewhere within the sector.
Given this uncertainty, we believe it is prudent to await further updates before reassessing our view. Within the Packaging sector, our preference remains Amcor PLC (ASX: AMC).
The broker has a buy recommendation and $76.00 price target on Amcor shares.
This indicates approximately 30% upside from its current stock price of $58.28.
