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Monday – Wells Fargo (NYSE:WFC) has downgraded Packaging Corp . of America (NYSE:PKG) shares from Overweight to Equal Weight, adjusting the price target to $180 from the previous $205. The decision comes as analysts at the firm revise their earnings and EBITDA estimates for the company for the years 2025 and 2026. According to InvestingPro data, five analysts have recently revised their earnings estimates downward, with price targets now ranging from $147 to $245.
Analysts have reduced their earnings per share (EPS) projections for Packaging Corp. of America to $9.55 for 2025 and $9.05 for 2026. Concurrently, they have also lowered their expectations for earnings before interest, taxes, depreciation, and amortization (EBITDA) to $1.75 billion for 2025 and $1.70 billion for 2026. The new price target is based on a 10.7 times multiple of the estimated 2026 EBITDA, a slight decrease from the previously used multiple of 10.8 times. The company’s current EBITDA stands at $1.76 billion, with the stock trading at an EV/EBITDA multiple of 10.37x.
The downgrade was influenced by several factors that Wells Fargo analysts identified. They noted worsening fundamentals in both domestic and global containerboard markets as a primary concern. Additionally, they pointed out that the stock now presents a more balanced risk/reward profile, which has contributed to the change in rating. InvestingPro data shows the stock trading near its 52-week low of $172.72, though it maintains a strong dividend history with 23 consecutive years of payments.
The valuation of Packaging Corp. of America is also a factor in the downgrade, with analysts mentioning that it remains elevated when compared to historical levels and peer companies. The revision reflects a cautious outlook on the company’s financial performance in the coming years amidst changing market conditions.
Investors are encouraged to consider these revised estimates and the rationale behind the downgrade as they assess Packaging Corp. of America’s stock performance and position in the market.
In other recent news, Packaging Corporation of America reported its Q1 2025 financial results, showcasing a strong performance. The company achieved earnings per share (EPS) of $2.31, surpassing the forecast of $2.21, while revenue reached $2.14 billion, exceeding the projected $2.12 billion. Additionally, the company declared a regular quarterly dividend of $1.25 per share, payable to shareholders on record as of June 13, 2025. The successful launch of a new facility in Glendale, Arizona, was also noted, which is expected to enhance productivity and capacity. Despite these positive developments, the company faces economic uncertainties that may impact customer behavior. Analysts from Bank of America Securities have raised questions about the company’s strategies in navigating these challenges. The company’s management emphasized their focus on operational efficiency and customer-centric strategies to adapt to the evolving market conditions.
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