International Paper Co. Holds Steady Amid Q1 Performance and Industry Challenges

International Paper Co (IP – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Gabrial Hajde from Wells Fargo maintained a Hold rating on the stock and has a $42.00 price target.

Gabrial Hajde has given his Hold rating due to a combination of factors that influence the current and future performance of International Paper Co. The first quarter results aligned with consensus expectations; however, there was a noted underperformance in Industrial Packaging volumes. The company’s EBITDA for Q1 was slightly higher than estimated but was adjusted for an unforeseen incident, which if not considered, would have resulted in a 3% improvement over the street’s expectations. The market’s response is anticipated to be reserved until there is more clarity on the second-quarter outlook, the realization of cardboard prices, and comments regarding the DS Smith merger.

The outlook for the industry in 2024 suggested a recovery in box demand, although the growth forecast was slightly reduced. Despite some segments showing soft performance, there’s an expectation of improvement. Additionally, costs for Old Corrugated Containers (OCC) and energy are predicted to rise. The second quarter expectations for Industrial Packaging include an improvement in volumes and a refined Box Go-to-Market strategy. While the report highlighted challenges, such as a decrease in operating income due to price headwinds and unfavorable geographic mix in Industrial Packaging, and a reduction in Global Cellulose’s operating income influenced by lower pulp pricing, it also noted areas of potential improvement, which substantiates the Hold rating.

Based on the recent corporate insider activity of 77 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of IP in relation to earlier this year.

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International Paper Co (IP) Company Description:

International Paper Co. engages in the manufacture of paper and packaging products. It operates through the following segments: Industrial Packaging, Global Cellulose Fibers, and Printing Papers. The Industrial Packaging segment involves in the manufacturing of containerboards, which include linerboard, medium, whitetop, recycled linerboard, recycled medium, and saturating kraft. The Global Cellulose Fibers segment offers cellulose fibers product portfolio includes fluff, market, and specialty pulps. The Printing Papers segment includes manufacturing of the printing and writing papers. The company was founded by Hugh J. Chisholm in 1898 and is headquartered in Memphis, TN.