UPDATE: Wells Fargo Starts Graphic Packaging Holding Company (GPK) at Equal Weight
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Wells Fargo initiates coverage on Graphic Packaging Holding Company (NYSE: GPK) with a Equal Weight rating and a price target of $23.00.
The analyst comments "We believe GPK is a fundamentally solid company, with leading market positions in multiple consumer end markets. We also believe GPK employs a judicious M&A strategy in order to (1) expand product oerings; (2) solidify market position; or (3) advance system integration. Near term, we see potential upside from industry price initiatives across GPK’s three primary paperboard grades and long-term beneits associated with large-scale investments. Finally, GPK should be able to resume a more shareholder-friendly redeployment strategy by 2022, following a heavy investment cycle. While positive, we acknowledge an elevated leverage profile (2021E at 3.4x) and potential cash outows to fully retire IP’s remaining stake in GPIP. We initiate at Overweight and our $23 price target represents 8.4x EBITDA (including IP’s minority stake) and a 9.2% FCF yield using our 2022 estimates."
Shares of Graphic Packaging Holding Company closed at $17.36 yesterday.
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