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Oppenheimer Reiterates Outperform Rating on Graphic Packaging Holding Co. (GPK)

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Oppenheimer is out with an analyst note this morning where they reiterate their Outperform rating on shares of Graphic Packaging Holding Co. (NYSE: GPK); they have a $5.00 price target on the stock.

Oppenheimer analysts noted that “Fundamentals appear intact, despite still-depressed volumes owing to ongoing high levels of blue-collar unemployment. As employment improves, volumes could improve in the mid-single-digits, up from the 4% decline in 2009 and the 1.5% increase in 1Q10. Any volume growth above 1.5% in 2H10 represents upside to estimates.”

They believe “believe late 2H10 and 2011 could see the benefit of contractual price increases in folding cartons, which typically lag moves in OCC/fiber by 6-12 months.” They are adjusting their 2010E EBITDA estimates to $570M from $602M, owing to the aforementioned assumptions. Oppenheimer is looking for 2011 EBITDA growth of 9% YoY to $622M and margin expansion of 50 basis points.

Analysts closed by saying, “Management continues to be highly focused on cash generation and debt paydown. The business could perform better than expected in 2H10, as OCC declines and volumes growth returns. The stock remains cheap, in our view, at 3x 2011 fully taxed FCF plus $0.50/sh for the NPV of NOL.”

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Posted-In: Oppenheimer & Co.Analyst Color Price Target Analyst Ratings

 

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