Truist reiterates Buy rating, $64 target on International Paper stock

On Wednesday, Truist Securities maintained a positive outlook on International Paper (NYSE:IP), reasserting their Buy rating and a price target of $64.00. The stock, currently trading at $56.26, has shown impressive momentum with a 53% return over the past year and is trading near its 52-week high of $60.36. Following the company’s Investor Day in New York, Truist Securities analysts expressed increased confidence in International Paper’s ongoing transformation. The firm is transitioning into a more efficient, customer-focused, and profitable entity. According to InvestingPro analysis, the company maintains a "Fair" overall financial health score of 2.48 out of 5, with particularly strong marks in profit and price momentum metrics.

Analysts from Truist Securities highlighted the advancements International Paper has made in implementing the 80/20 strategy in North America. This strategy focuses on streamlining operations and has already shown significant potential for further cost reductions, productivity enhancements, and overall optimization. The 80/20 principle typically suggests that 80% of a company’s outputs result from 20% of its inputs, and it seems International Paper is effectively leveraging this concept. The company’s operational efficiency is reflected in its healthy current ratio of 1.51 and manageable debt-to-equity ratio of 0.74. For deeper insights into IP’s financial metrics and more than 10 exclusive ProTips, consider accessing the comprehensive research available on InvestingPro.

The acquisition of DS Smith by International Paper is another strategic move that has captured analysts’ attention. Truist Securities noted that this addition provides International Paper with greater scale in the European market. Moreover, it opens up new growth opportunities and the potential for beneficial cross-pollination between the two companies. Analysts expect the merger to bring about notable benefits from the 80/20 strategy and cost savings.

Truist Securities’ reiteration of the Buy rating on International Paper stock is a reflection of their belief in the company’s strategic initiatives and their potential to enhance shareholder value. The firm’s confidence is rooted in the progress International Paper has demonstrated, particularly in terms of cost management and operational efficiency.

In summary, Truist Securities sees a strong path ahead for International Paper, backed by strategic moves like the DS Smith acquisition and the effective implementation of the 80/20 strategy. The firm’s analysts have conveyed a clear expectation for continued improvements in International Paper’s business model and financial returns. Supporting this optimistic outlook, InvestingPro data shows that International Paper has maintained dividend payments for 55 consecutive years, currently offering a 3.29% yield. Analysts expect both sales and net income growth in the current year, though investors should note that based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value.

In other recent news, International Paper has announced its financial targets for the coming years, projecting an adjusted EBITDA between $3.5 billion and $4 billion by 2025 and increasing to $5.5 billion to $6 billion by 2027. The company also forecasts a free cash flow of $2 billion to $2.5 billion for 2027, surpassing some analysts’ expectations. Citi analysts have maintained a Buy rating on International Paper with a price target of $60, citing the company’s financial targets as slightly above expectations. Meanwhile, BofA Securities has kept a Neutral rating with a $61 price target, noting the company’s guidance aligns with or exceeds their projections.

JPMorgan has initiated coverage on International Paper with an Overweight rating and a $59 price target, highlighting the potential for increased profitability under new CEO Andy Silvernail. The integration of DS Smith is expected to contribute significantly to this growth, with synergy estimates now ranging from $600 million to $700 million. The company’s revenue guidance for 2025 is set at approximately $27 billion, higher than previous estimates.

Citi analysts have provided insights into the containerboard market, noting stable prices in March and a neutral impact on companies like International Paper. As the company continues to focus on its strategic goals, it also aims for long-term revenue growth and increased shareholder value through mergers, acquisitions, and share buybacks.

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