JP Morgan Comments On Boise Following Recent Conference

Along with its growing Packaging segment, Boise

also has a growing Label & Release business in its Paper segment. JP Morgan thinks BZ is well positioned in L&R to continue to grow and earn solid margins, offsetting a portion of the commodity UCFS decline. Combined with Packaging, JPM sees a portfolio shifting from declines toward growth, with solid FCF in the meantime. Bottom line is that JP Morgan likes this business for its growth/profitability outlook; and, it believes that it supports the view that BZ's valuation gap should narrow versus the group. JP Morgan maintains its OW/Top Pick rating. L&R represents >10% of total BZ sales. JP Morgan estimates that BZ is the largest player in the North American release liner market, with 25%+ share and what we believe is the largest liner machine in North America. Not only is this asset first quartile for release liner paper, but also the company is not dependent on market pulp, a key positive in a rising pulp price environment, whereas smaller competitors are pulp short and either squeezed or forced to pass on costs. BZ closed Friday at $9.10