Investing.com -- UBS has begun coverage on four U.S. paper and packaging stocks with mixed views, demonstrating varying levels of confidence in operational momentum, valuation, and margin trajectories across the group.
International Paper (NYSE:IP) received the most favorable rating, with UBS initiating at Buy and setting a $60 price target, implying 27% upside.
Analysts described IP as a turnaround story, citing “significant self-help opportunity” and a new CEO with a strong operational track record.
UBS models approximately 50% EBITDA growth from 2025 to 2027, driven by cost savings, capacity closures, and better-than-expected pricing.
“We see a buying opportunity, as IP’s margins should approach 19% by 2027,” analysts led by Anojja Shah wrote, approaching sector leader PKG’s 20% margin.
Separately, Graphic Packaging (NYSE:GPK) was initiated at Neutral with a $24 target. While acknowledging the shift from capital expenditure (capex) to aggressive share buybacks—with $1.3 billion modeled through 2027—Shah sees offsetting headwinds from consumer weakness and volume declines.
“We model a ~2% volume decline in 2025 vs consensus at -3%,” the analysts wrote. Despite projected free cash flow (FCF) growth and innovation tailwinds, fundamentals remain mixed as the company navigates softness among its core food and beverage customers.
Meanwhile, Packaging Corp of America (NYSE:PKG), long seen as the sector’s most consistent performer, was also rated Neutral.
Shah and his team highlighted the company’s strong customer relationships and margin leadership, but believe the stock already prices in a bullish scenario.
“While PKG regularly posts the best volumes and margins in the sector, we believe the market is implying EBITDA levels above our and consensus numbers for 2025/2026,” they said.
Pricing strength remains positive, but upside is seen as limited from current levels.
Lastly, Sonoco Products (NYSE:SON) also received a Neutral rating. UBS acknowledged strategic portfolio shifts that streamlined operations and added scale, especially in food cans, but flagged uncertainty around growth and execution.
“We still need more clarity on some open questions,” the bank wrote, pointing to elevated leverage, integration of the Eviosys acquisition, and visibility on synergy targets. UBS sees the stock fairly valued at current levels with a $48 price target.
