UPDATE: Graphic Packaging Holding Company (GPK) PT Raised to $25 at RBC Capital Noting Multiple Growth Drivers

October 28, 2021 6:32 AM EDT
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Price: $20.06 +1.62%

Rating Summary:
    18 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 7 | New: 13
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(Updated - October 28, 2021 7:42 AM EDT)

RBC Capital analyst Arun Viswanathan raised the price target on Graphic Packaging Holding Company (NYSE: GPK) to $25.00 (from $22.00) on continued robust demand and multiple growth drivers (Kalamazoo startup, price actions, stabilizing raw material inflation, M&A benefits and ESG tailwinds). Q3 EPS of $0.34 was above the Street’s $0.31 estimate while adj. EBITDA of $284M included: volume/mix of +$3M, pricing of +$53M, net operating performance of +$79M, partially offset by commodity inflation of -$88M and Labor & Benefits of -$13M. Management expects the AR Packaging acquisition to close on 11/1.

The analyst reiterated an Outperform rating, stating "we expect commodity input cost (~$45M in Q4) and supply chain disruption to remain a headwind for GPK and therefore we are lowering our Q4/FY21 EBITDA estimates to $278M/$1,050M (from ($321M/$1,080M). Looking beyond FY21, we believe GPK will successfully navigate raw material inflation with ~$650M of total pricing actions ($140M in FY21 and $510 FY22). Furthermore, we believe demand for paper-based packaging should
remain elevated, given ESG tailwinds".

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