2017-06-28 13:44:49 | BMO says Packaging has 'dry powder,' unlikely to buy KapStoneAfter spending time with management, BMO Capital analyst Mark Wilde earlier today raised his price target on Packaging Corp. of America (PKG) to $118 from $104. The company, with "considerable dry powder financially," is unlikely to buy a business like KapStone (KS) in the near-term, Wilde told investors in a research note. He notes that KapStone is often highlighted as a prospective acquisition candidate. Packaging is also unlikely to pursue a near-term conversion of one of its two flagship white paper mills to containerboard, the analyst adds. Wilde points out that management suggested a more likely option was the acquisition/conversion of a mill from another producer of printing and writing paper. The analyst used Domtar's (UFS) uncoated mill at Hawesville, Kentucky as a "good hypothetical example." He estimates Packaging could convert the mill for $125M-$225M. Packaging shares in afternoon trading are up 2% to $113.17, while KapStone is up 3% to $21.05 and Domtar is up 5% to $39.07. Wilde has Outperform ratings on Packaging Corp. of America and KapStone and a Market Perform rating on Domtar. | |
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