Deutsche Bank Downgrades Wausau Paper (WPP) to Hold; Wiping Up: Wausau's New Capital Program

Deutsche Bank downgraded Wausau Paper (NYSE: WPP) from Buy to Hold. PT lowered from $13 to $9.

Deutsche analyst says, "The program is ~$4.50/share of capex on an $7.67 stock. Wausau will break ground this summer on a 75,000/tpy recycled towel & tissue machine at its Harrodsburg, KY converting facility. The machine will start in 2013. While we’re happy to see Wausau focus on its Bay West tissue ops, the size of the current investment is substantial relative to Bay West’s existing asset base. It's hard to imagine ROI won't slide as a result...The tissue operations represent only ~25% of sales but generate 60-65% of EBITDA. With healthy & stable margins, Bay West should attract a higher valuation multiple if de-coupled from the volatile & lower-return paper businesses."

For more ratings news on Wausau Paper click here and for the rating history of Wausau Paper click here.

Shares of Wausau Paper closed at $7.65 yesterday.

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