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Citi: Buy WestRock With 'Plentiful' Catalysts Coming

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In a report published Thursday, Citi analyst Anthony Pettinari initiated coverage of WestRock Co (NYSE: WRK) with a Buy rating and price target of $73. The company is the analyst's top pick in the Paper & Packaging space.

WestRock was created with the merger of RockTenn CP, LLC and MeadWestvaco Corp. (NYSE: MWV), and the analyst believes that there is significant upside to WestRock's synergy guidance of $300 million.

"We model WRK executing $2.4B in share repurchases over the next 2 years, driving 20+ percent CAGR EPS growth in 2014-17," Pettinari stated, while expecting the management to "allocate spare balance sheet firepower to highreturn internal projects and further accretive M&A."

In addition, the analyst believes that there are multiple catalysts for the stock in 2H. The Specialty Chemicals business, which the analyst values at $3.1 billion, is likely to be spun off by the end of the year, which could lead to a one-time cash dividend of $600-$700 million.

"We expect WRK's larger market cap, EPS growth potential and attractive dividend to attract new investor interest," Pettinari added, while mentioning that the stock offers a favorable risk/reward profile.

Latest Ratings for WRK

Sep 2016Deutsche BankMaintainsBuy
Sep 2016Goldman SachsInitiates Coverage onNeutral
Sep 2016CLSAMaintainsUnderperform

View More Analyst Ratings for WRK
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Posted-In: CitiAnalyst Color Initiation Analyst Ratings


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