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Investing.com -- Bank of America upgraded Silgan Holdings and International Paper to Buy from Neutral in a note covering the packaging and paper/forest products on Thursday, citing valuation support and stronger pricing dynamics across the packaging and paper sector.
“It was a tough 2Q reporting season, with our pkgg/paperboard stocks down ~5% vs the S&P 500 since 6/30,” BofA analysts wrote.
“Given recent events and mindful of our ratings, we upgrade Silgan and International Paper to Buy from Neutral. Separately, we increase our containerboard price forecasts, which are already above consensus.”
On Silgan, BofA said the stock’s recent decline created an attractive entry point. “Sporting a ~11-12x P/E on 25-26 estimates and an implied flattish growth rate (v. averages closer to 14x and ~1-2%, respectively), we upgrade Silgan (SLGN) to Buy from Neutral,” the analysts said.
They added that while the company faces “weak bev-closure vols and food can-customer bankruptcy issues,” the “sell-off and the potential for improved volumes supports a Buy.”
On International Paper, BofA pointed to pricing as the key driver of upside. “We move to Buy on International Paper and now have Buys across our three c’board companies,” the note stated.
“Operating rates will now be over 95% in 2026 and we add another $40/ton to pricing for 3Q26 to our existing $40/ton increase in 1Q26 – our average $60/ton increase exceeds consensus for $20-30/ton.”
BofA also reiterated its broader view of the sector. “Several years ago, we wrote the sector’s equities were akin to bonds masquerading as stocks given their good cash flows but limited growth,” the analysts said.