Fly News Breaks for March 4, 2020
Mar 4, 2020 | 07:16 EDT
Following PPW's surprise $30 per ton boxboard price cut on February 20, Graphic Packaging shares fell 15.9% last week, Goldman Sachs analyst Brian Maguire tells investors in a research note. As a result, the shares now trade at a 10.0% free cash flow yield, the analyst points out. He believes this is "too high given secular growth tailwinds from sustainability" that are driving 1%-2% volume growth, so long as no further price cuts are ahead. Graphic Packaging shares have outperformed Packaging peers by an average of 44% in the 12 months following the first price cut in the past five years, says Maguire. As a result, the analyst believes pricing and earnings have been "de-risked" following the recent cuts, and he views the company's current share price as an attractive entry point. Maguire keeps a Buy rating on Graphic Packaging with a $17 price target.
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