Valued at a market cap of $20.4 billion, International Paper Company (IP) is a global leader in fiber-based packaging, pulp and paper products. The Memphis, Tennessee-based company is committed to sustainability, focusing on responsible forest management, efficient manufacturing, and reducing its environmental footprint.
This packaging company has significantly underperformed the broader market over the past 52 weeks. Shares of IP have declined 33.8% over this time frame, while the broader S&P 500 Index ($SPX) has surged 19.6%. Moreover, on a YTD basis, the stock is down 31.4%, compared to SPX’s 16.5% uptick.
Narrowing the focus, IP has also considerably lagged behind the Materials Select Sector SPDR Fund’s (XLB) 8.6% loss over the past 52 weeks and 1.2% rise on a YTD basis.
On Oct. 30, shares of IP tumbled 12.7% after its disappointing Q3 earnings release. While the company’s revenue improved 56.4% year-over-year to $6.2 billion, it fell short of analyst expectations by 9.7%. Sequentially, its top line increased modestly by 1.3%. Meanwhile, its profitability deteriorated sharply, with its adjusted EPS swinging to a loss of $0.43 from a profit of $0.33 in the same quarter last year, well below consensus expectations of a $0.53 gain. This notably below-par performance might have weighed heavily on investor sentiment.
For the current fiscal year, ending in December, analysts expect IP’s EPS to grow 15.9% year over year to $1.31. The company’s earnings surprise history is disappointing. It missed the consensus estimates in three of the last four quarters, while surpassing on another occasion.
Among the 13 analysts covering the stock, the consensus rating is a "Moderate Buy,” which is based on seven “Strong Buy,” one "Moderate Buy,” three “Hold,” and two "Strong Sell” ratings.
This configuration is slightly more bullish than a month ago, with three analysts suggesting a “Strong Sell” rating.
On Nov. 3, UBS Group AG (UBS) analyst Anojja Shah maintained a "Buy" rating on IP and set a price target of $53, indicating a 43.5% potential upside from the current levels.
The mean price target of $53.84 represents a 45.8% premium from IP’s current price levels, while the Street-high price target of $62 suggests an upside potential of 67.9%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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