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Investing.com - UBS maintained its neutral rating and $24.00 price target on Graphic Packaging Holding Company (NYSE:GPK) stock following a non-deal roadshow with the company’s CFO Stephen Scherger. The stock, currently trading at $21.25, sits near its 52-week low of $20.86 and appears undervalued according to InvestingPro Fair Value metrics.
The packaging company, with annual revenues of $8.67 billion, is experiencing slightly better volumes in the second quarter than expected, reporting flattish volumes compared to guidance for a 2% volume decline this year. Early signs of improvement are appearing in promotional activity, particularly in the beverage segment which represents 25% of sales.
Food packaging, accounting for 40% of GPK’s sales, has not yet seen increased promotional activity as food companies have prioritized pricing over volume in recent years. UBS noted that General Mills (NYSE:GIS)’ recent guidance for approximately 1% organic growth in fiscal year 2026 could signal potential volume growth and greater openness to promotions. InvestingPro analysis reveals the company maintains strong profitability with an EBITDA of $1.61 billion, despite operating with a significant debt burden.
The company’s Waco facility remains on schedule for a fourth-quarter startup, with management committed to ramping production while monitoring supply and demand dynamics. Full production capacity at the facility is not expected until 2027.
UBS maintained its existing thesis on Graphic Packaging following the meeting, with the analyst gaining "a better sense of the downside for 2026" while reiterating the neutral rating and price target established in a recent initiation.
In other recent news, Graphic Packaging Holding Company reported its first-quarter 2025 earnings, revealing an adjusted earnings per share of $0.51, which missed the forecast of $0.59. The company’s revenue also fell short, coming in at $2.1 billion compared to the expected $2.15 billion. Additionally, Citi analyst Anthony Pettinari adjusted the price target for Graphic Packaging to $23.00 from $23.00, maintaining a Neutral rating following the company’s earnings miss and reduced full-year EBITDA guidance. Meanwhile, RBC Capital lowered its price target for the company to $25.00 from $26.00, citing excess inventory as a concern, but maintained an Outperform rating. UBS initiated coverage of the stock with a Neutral rating and a price target of $24.00, noting potential for increased free cash flow and share repurchases in the coming years. In governance news, Graphic Packaging announced amendments to its corporate charter, eliminating supermajority voting provisions to simplify the voting process. These developments reflect the company’s ongoing challenges and strategic shifts amid a difficult economic environment.
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