UPDATE: Goldman Sachs Starts Packaging Corp. of America (PKG) at Sell
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(Updated - September 22, 2016 9:09 AM EDT)
Goldman Sachs initiated coverage on Packaging Corp. of America (NYSE: PKG) with a Sell rating and a price target of $77, implying 6% downside. Analyst Brian Maguire said the stock's premium is unjustified, and he sees limited growth.
"Our rating is based on: 1) PKG’s 0.5x to 1.0x EBITDA valuation premium to Containerboard peers (IP, WRK, KS), which we believe is too high based on PKG’s non-Containerboard exposure to UCFS (14% of EBITDA); 2) our neutral to slightly negative view on Containerboard (86% of EBITDA), and in particular our view that investor expectations for price increases are too optimistic; 3) relatively few identifiable growth drivers within existing product lines," said Maguire.
Shares of Packaging Corp. of America closed at $81.66 yesterday.
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