Ahead Of The Bell: Packaging Companies

HARTFORD, Conn. (AP) — Analysts reassessed their opinions of packaging companies Thursday after Temple Inland Inc., Packaging Corp. of America and Pactiv Corp. reported quarterly results.

Analyst Richard Skidmore of Goldman Sachs raised his 2009 estimate on Temple Inland after the maker of corrugated packaging and building products delivered "surprisingly strong" first-quarter results. The Austin, Texas-based company on Wednesday said its quarterly profit grew, beating Wall Street estimates as higher box prices and lower raw materials costs offset a downturn in demand.

The analyst said job cuts, lower fixed costs and increased use of assets drove the improvement.

Meanwhile, Skidmore downgraded Packaging Corp. of America to "Neutral" from "Buy," saying that its current valuation appears reasonable. He raised his six-month share price target to $16 from $13 to account for a change in his valuation methodology.

"Longer term, we maintain a positive outlook on Packaging Corp. shares given its leverage to containerboard, low cost position and strong balance sheet," he said in a note to investors Wednesday.

Lake Forest, Ill.-based Packaging Corp. of America posted first-quarter earnings earlier this week that were above Wall Street estimates. Earnings were down 19 percent as the recession lowered demand for containerboard and its other packaging products.