Shares of packaging companies rise Aug. 13 as analyst upgrades IP, RockTenn and PCA to outperform from neutral, says containerboard price increase appears to be sticking and US$30/ton hike could occur in September
August 13, 2012
– Shares of packaging companies rose on Monday as an analyst upgraded a trio of businesses, saying that a containerboard price increase appears to be sticking.
Albert Kabili of Credit Suisse lifted International Paper Co., Rock-Tenn Co. and Packaging Corp. of America to "Outperform" from "Neutral."
The analyst said in a client note that while he was initially skeptical on whether the price hike would be accepted, the industry seems to be supportive of it and customers "have less opportunity and avenues of resistance than we initially anticipated."
Kabili says there could be a $30 per ton price increase for containerboard in September, which is six months earlier than his prior prediction. The analyst also believes there is a reasonable chance that the sector could successfully impose the $50 per ton price hike previously announced.
While demand is flat, Kabili says containerboard companies are keeping tight watch on inventory levels in order to create a supply-driven price hike.
The analyst raised International Paper's price target to $40 from $34. Its stock climbed $1.06, or 3.3 percent, to $33.69 in afternoon trading. Over the past year, the shares have traded between $21.55 and $36.50.
Kabili increased Packaging Corp. of America's price target to $36 from $31. Shares of the company rose 43 cents to $31.10.
The analyst boosted the price target of Rock-Tenn to $73 from $60. Its stock gained $1.50, or 2.4 percent, to $63.28. The shares have traded in a 52-week range of $43.61 to $74.15.
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