UPDATE: Deutsche Bank Downgrades KapStone and Packaging to Hold Following Longview Fibre Acquisition Announcement

In a report published Wednesday, Deutsche Bank analyst Mark Wilde downgraded the rating on KapStone and Packaging KS from Buy to Hold, but raised the price target from $31.00 to $38.00.

In the report, Deutsche Bank noted, “On Monday, KapStone announced the acquisition of Longview Fibre from Brookfield Capital Partners II for $1.025B in cash. We like the deal – strategically & financially. The acquisition expands KS's presence in the west & makes it a global leader in kraft paper. At ~5.2x 2014 proforma EBITDA, valuation is attractive & KS should be able to delever rapidly. However, since the announcement on Monday afternoon, the stock is up ~23%. At current price levels, much of the accretion appears ‘priced-in'. We're taking a step back on our rating. Downgrade from Buy to Hold. Raising PT from $31 to $38.”

KapStone Paper and Packaging closed on Tuesday at $36.61.