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On Wednesday, Citi analysts, led by Anthony Pettinari, reinstated coverage on International Paper (NYSE:IP) shares, assigning a Buy rating and setting a price target of $60. The move marks a significant moment for the company as the coverage comes after a period in which the rating was suspended. According to InvestingPro data, analyst targets for IP currently range from $47 to $66, with the stock trading at $51.30.
Pettinari’s remarks underscore the potential for substantial earnings growth for International Paper, driven by internal cost reductions and synergies from its DS Smith acquisition. The analyst projects that these factors could propel the company’s EBITDA to approximately $5 billion by 2027, a significant increase from the current $2.03 billion. For the year 2025, the forecast is set at $3.7 billion in EBITDA, with the base business of International Paper contributing around $2 billion, DS Smith adding close to $1.5 billion, and cost savings contributing approximately $200 million.
The analysis suggests that International Paper’s earnings could accelerate starting from around 2026 as the company advances toward its medium-term cost savings goal of $2 billion, having already achieved $230 million in savings in 2024. The company is also expected to continue realizing further synergies with DS Smith. InvestingPro analysis reveals that IP has maintained dividend payments for 55 consecutive years, demonstrating a strong track record of shareholder returns. Subscribers can access 10+ additional ProTips and comprehensive financial metrics for deeper analysis.
The upcoming Investor Day on March 25 is anticipated to be a pivotal event for International Paper, with expectations set for the company to increase its original synergy target of $530 million, which was announced in April of the previous year. Pettinari emphasizes that the potential benefits from these strategic moves are likely to outweigh the risks associated with the broader economic cycle for International Paper. The stock currently trades at a P/E ratio of 32.9, though InvestingPro data indicates this is relatively low compared to near-term earnings growth potential.
In other recent news, International Paper reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of negative $0.02, which was better than the forecast of negative $0.07. However, the company reported revenue of $4.58 billion, falling short of the expected $4.73 billion. The company has announced the permanent shutdown of four U.S. facilities by April 2025, affecting 674 employees, as part of a strategic transformation to enhance its sustainable packaging solutions. In a significant development, International Paper completed its acquisition of DS Smith PLC, leading S&P Global Ratings to upgrade the credit ratings of DS Smith PLC to match those of International Paper. Additionally, International Paper has appointed David Robbie to its Board of Directors, bringing his extensive finance and corporate experience to the company. The company also published a supplementary prospectus related to the DS Smith acquisition, providing further information to investors. These recent developments indicate International Paper’s ongoing efforts to optimize its operations and strengthen its market position.
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