Close

UPDATE: Goldman Sachs Raises Price Target on Containerboard Names to Reflect MLP Premium (IP) (RKT) (PKG)

November 10, 2014 9:32 AM EST
Get Alerts IP Hot Sheet
Price: $34.94 --0%

Rating Summary:
    9 Buy, 9 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 5 | New: 36
Join SI Premium – FREE
(Updated - November 10, 2014 9:34 AM EST)

Goldman Sachs maintained a Buy rating on International Paper (NYSE: IP) and raised its price target to $60.00 (from $51.00). RockTenn (NYSE: RKT) was maintained a Buy with a price target of $63 (from $52). Neutral rated Packaging Corporation of America's (NYSE: PKG) price target was raised to $80 (from $69). Analyst Alex Ovshey discussed MLP-ification in containerboard names.

"We are building in an MLP premium into our price targets and believe it is reasonable to do so reflecting recent commentary on MLP-ification from our covered containerboard names – IP, RKT, and PKG – which in our view reflects a willingness to pursue the opportunity," said Ovshey.

"We are building in a third (2.5X-3.0X EV/EBITDA) of the full estimated MLP-ification premium into our valuation framework for containerboard names as the IRS remains in a moratorium for granting MLP status PLRs, and the update from the IRS is a wildcard. For our covered containerboard producers – IP, RKT, and PKG – we estimate that approximately 60%, 60%, and 85% of total company EBITDA could qualify for MLP status, under the current IRS guidelines. Our revised price targets imply an average 13% upside for IP, RKT and PKG," he added.

For an analyst ratings summary and ratings history on International Paper click here. For more ratings news on International Paper click here.

Shares of International Paper closed at $52.87 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS View, Analyst PT Change, Hot Comments

Related Entities

Goldman Sachs