Morgan Joseph Reiterates a 'Buy' on KapStone Paper and Packaging (KPPC) (KS); Raises PT & Estimates

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Morgan Joseph reiterates a 'Buy' rating on KapStone Paper and Packaging Corp. (Nasdaq: KPPC) (NYSE: KS), raises price target from $8 to $14.

Morgan analyst says, "We expect linerboard and kraft price increases of approximately $50 per ton to increase 2010 sales by approximately $45mm. With the price increase applied to 900,000 tons of product and KapStone's improved debt situation, we believe growth prospects for KapStone are solid. The pricing trend is being driven by reduced industry capacity and increased demand from customers who are building inventories. We have adjusted our 2010 estimates to reflect the price increases we are expecting. We now estimate total 2010 sales of $737.1mm, gross profit of $154.8mm, operating income of $62.5mm, and net income of $30.0mm or $0.65 per diluted share. We had expected sales of $692.5mm, gross profit of $132.4mm, EBITDA of $101.3mm, operating income of $43.8mm, and net income of $18.7mm or $0.40 per diluted share...Despite our new estimates, as outlined above, we believe KapStone has upside potential for 2010 results. As housing demand picks up, saturating kraft demand should also pick up, which we believe could lead to a more favorable product mix later in the year."

To see all the upgrades/downgrades on shares of KPPC, visit our Analyst Ratings page.

KapStone Paper and Packaging Corporation (KapStone), formerly Stone Arcade Acquisition Corporation is engaged in producing and selling a range of unbleached kraft paper, linerboard, folding carton board, saturating kraft, inflatable dunnage bags and dimensional lumber.

(NOTE - shares begin trading on the NYSE under symbol KS today)