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Investing.com - RBC Capital lowered its price target on Sylvamo Corp. (NYSE:SLVM) to $49.00 from $61.00 on Monday, while maintaining a Sector Perform rating on the paper and packaging company’s stock. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 7.7x with a notable free cash flow yield of 12%.
The price target reduction follows Sylvamo’s weaker-than-expected guidance for third-quarter Adjusted EBITDA of $145-165 million, which falls short of the consensus estimate of $191.2 million.
Sylvamo shares fell 15.6% following the guidance announcement, significantly underperforming compared to the S&P 500’s 0.8% gain during the same period.
RBC Capital described the market’s reaction as "exaggerated" but noted challenges in identifying a path to "meaningful upside without some rationalization of industry capacity" that could improve market balance.
The investment firm acknowledged Sylvamo’s low-cost mill system and its pipeline of high-return capital projects as positive factors, but cited an uncertain outlook as the reason for maintaining its Sector Perform rating.
In other recent news, Sylvamo Corporation reported its second-quarter 2025 earnings, which fell short of analyst expectations. The company’s adjusted earnings per share (EPS) were $0.37, missing the anticipated $0.48 by 22.92%. Revenue also came in below forecasts, totaling $794 million compared to the expected $831.74 million, a shortfall of 4.54%. Additionally, BofA Securities downgraded its price target for Sylvamo to $44 from $64, maintaining an Underperform rating. The firm pointed to challenges in the paper and pulp sector and broader economic issues affecting Sylvamo’s performance. BofA noted a 6% decline in North American volumes, excluding the impact from the Georgetown mill closure, partly due to increased imports before trade restrictions. These developments highlight ongoing challenges faced by Sylvamo in the current market environment.
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