Packaging Corp. of America (PKG) PT Raised to $105 at KeyBanc

KeyBanc analyst Adam J. Josephson raised the price target on Packaging Corp. of America (NYSE: PKG) to $105.00 (from $94.00) after topped consensus in 3Q thanks to lower than expected maintenance outage expense and the exclusion of hurricane costs. However, bigger news came on the call: box shipments through the first 16 days of October were up a whopping 15%, and the Company will begin producing containerboard at its Jackson, AL mill next month.

The analyst stated "PKG's two disclosures highlight the state of affairs in N.A. containerboard: demand's outstanding at the moment, and a wave of supply is coming over the next two years". He went on to explain why this demand uplift is likely temporary, stating "we expect the strength in U.S. box demand to last through early next year, as does PKG, but we believe it to be a temporary phenomenon for the reasons just mentioned. After all, U.S. box demand this century is flat, and over the past three years is up 1.1%/yr.; we're unaware of anything that has structurally changed, unless investors believe consumers will be stuck at home for years to come and will consequently spend the vast majority of their disposable income on goods from Amazon and others. And by the way, Amazon itself is trying to reduce its corrugated consumption."

while maintaining a Underweight rating.

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