Packaging Corp. of America (PKG) Stock Downgraded at Deutsche Bank

Packing Corporation of America (PKG) stock closed up on Friday, despite Deutsche Bank downgrading the company to 'hold' from 'buy.'
By Annie Palmer ,

NEW YORK (TheStreet) -- Shares of Packaging Corporation of America (PKG) - Get Report closed up by 0.72% to $74.34 on Friday, despite Deutsche Bank downgrading the stock to "hold" from "buy" this morning, citing limited upsides in the market.

The firm also lowered its price target on shares of the Lake Forest, IL-based manufacturing company to $73 from $75. 

Deutsche Bank analysts said there are several downside risks with the stock, such as cost inflation for Packaging Corporation of America's major costs, including pulpwood, energy, chemicals and wastepaper. The firm added that they believe the market has absorbed the higher earnings trajectory.

Additionally, the company reported worse-than-expected results its fiscal 2016 second quarter when its second quarter results were reported after the market closed on Wednesday. 

The company reported earnings of $1.23 per share on revenue of $1.42 billion. Analysts expected Packaging Corporation of America to post earnings of $1.29 per share on revenue of $1.47 billion. 

Last year, the Packaging Corporation of America posted earnings of $1.18 per share on revenue of $1.45 billion. 

On Wednesday, the company announced it would be purchasing the corrugated products company TimBar for $386 million. The deal is expected to close in the third quarter. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate PACKAGING CORP OF AMERICA as a Buy with a ratings score of B+. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company shows low profit margins.

You can view the full analysis from the report here: PKG

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