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On Tuesday, Citi analyst Anthony Pettinari reaffirmed a Buy rating on International Paper (NYSE:IP) with a steady price target of $60.00. This aligns with the broader analyst consensus, as tracked by InvestingPro, which shows analyst targets ranging from $47 to $71, reflecting the market’s mixed sentiment on the stock currently trading at $56.27. Pettinari’s statement followed the release of International Paper’s slide deck prior to its Investor Day, indicating the company’s financial targets are slightly above expectations. International Paper is aiming for adjusted EBITDA between $3.5 billion and $4.0 billion for the year 2025, compared to a consensus of $3.71 billion. For context, InvestingPro data shows the company’s current EBITDA stands at $2.03 billion, with 8 additional financial health indicators available to subscribers. The company also forecasts free cash flow (FCF) in the range of $100 million to $300 million, inclusive of a $1.9 billion capital expenditure and a $500 million cost to achieve synergies.
For the year 2027, International Paper has set a net revenue target of $26 billion to $28 billion, which is below the consensus estimate of $29.7 billion. However, the company’s EBITDA projection of $5.5 billion to $6.0 billion surpasses the consensus of $4.92 billion. This excludes $450 million from the Global Cellulose Fibers (GFC) business, which International Paper intends to exit. The FCF expectation for 2027 is set at $2.0 billion to $2.5 billion, assuming a capital expenditure of $1.9 billion, approximately 6.5% of sales, and is higher than the consensus estimate of $1.8 billion.
Additionally, International Paper has increased its synergy target for DS Smith from $514 million to $600 million to $700 million by the year 2027. In the long term, the company aims for an annual revenue growth of 3-4%, EBIT growth of over 5%, a dividend yield of 3-4% (representing 40-50% of FCF), and a growth of 3-4% from high-return reinvestments, which includes organic growth, mergers and acquisitions, and share buybacks. Notably, InvestingPro data highlights IP’s impressive 55-year streak of consecutive dividend payments, with a current yield of 3.5% and a market capitalization of $29.57 billion. Get access to comprehensive analysis and 10 additional ProTips about IP’s financial outlook through InvestingPro’s detailed research reports.
In other recent news, International Paper has projected a significant increase in its revenue, estimating it to reach approximately $27 billion by 2025, surpassing previous forecasts. The company also anticipates its adjusted EBITDA for that year to be between $3.5 billion and $4 billion. Looking further ahead, International Paper predicts free cash flow of $2 billion to $2.5 billion by 2027, with adjusted EBITDA expected to rise to between $5.5 billion and $6 billion. In a strategic move, International Paper has become the guarantor for DS Smith’s outstanding notes, providing legal assurance for its payment obligations.
JPMorgan has initiated coverage on International Paper with an Overweight rating, highlighting the potential for profitability growth under new CEO Andy Silvernail. The firm suggests that the integration of DS Smith could double the company’s EBITDA in the medium term. Similarly, Citi analysts have reinstated coverage with a Buy rating, projecting EBITDA to reach approximately $5 billion by 2027, driven by cost reductions and synergies from the DS Smith acquisition. The company’s upcoming Investor Day is expected to shed more light on these strategic initiatives.
Meanwhile, Citi analysts maintain a neutral outlook on containerboard prices, noting stability in the market despite earlier price hikes. They predict that containerboard prices will remain flat through the end of the year, considering the current economic uncertainties. These developments collectively indicate a period of strategic transformation and financial growth for International Paper.
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