Here’s a Reason International Paper (IP) Stock Closed Down Today
NEW YORK (TheStreet) -- Shares of International Paper (IP) - Get Report closed lower by 2.95% to $42.18 on Tuesday after the paper and packaging company's stock was downgraded to "hold" from "buy" at Jefferies. The firm also lowered their price target to $47 from $51 on the Memphis, TN-based company.
Analysts believe International Paper's $2.2 billion acquisition of Weyerhaeuser's (WY) pulp business will increase volatility in free cash flow as the industry is expected to see a 35% increase in pulp production through 2019.
"Additionally, the synergy target appears aggressive and a large portion of the synergies could be offset by lower fluff pulp prices," Jefferies analysts wrote in a note released before the market open.
International Paper could also see limits to its buyback program as the company focuses on debt payments, analysts noted.
"IP is admittedly cheap, but given the likely increasing concerns around supply/demand dynamics in fluff, we could see some modest multiple compression and believe the stock is fairly valued," analysts added.
Separately, International Paper has a "buy" rating and a letter grade of B at TheStreet Ratings because of the company's growth in earnings per share, increase in net income, attractive valuation levels and notable return on equity.
You can view the full analysis from the report here: IP
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 article's author.
