Temple-Inland Falls After Downgrade On Valuation

NEW YORK (AP) — A recent steep share price rise by Temple-Inland Inc. was cited by an analyst as she cut her rating on the packaging and building material maker.

Its shares fell 7 percent Thursday afternoon even as the broader market rose.

UBS analyst Gail Glazerman said the Austin, Texas, company's shares had risen more than five-fold to nearly $14 from a March 6 low of $2.52 on strong financial results. By contrast, the S&P 500 index has risen 37 percent in the same period, while the S&P paper index almost tripled.

The company's first-quarter performance reflected its practice of buying natural gas on the open market, thus letting Temple-Inland benefit from price declines, and its integrated containerboard operations, which protect it from volatile export markets.

However, challenges are right around the corner.

"With the company running at an estimated 94 percent of capacity in the first quarter and gas prices stabilizing, we believe Temple-Inland's momentum could slow a bit moving forward," Glazerman wrote in a client note.

"In the near term, we believe other companies have greater relative upside from improving volumes and falling costs."

Besides downgrading the shares to "Neutral" from "Buy," she cut her 2009 earnings per share estimate to 55 cents from 65 cents.

Analysts polled by Thomson Reuters expect earnings, on average, of 42 cents per share.

In afternoon trading, the stock fell 98 cents, or 7.1 percent, to $12.89.