NEW YORK (TheStreet) -- International Paper (IP) - Get Report stock is tumbling by 7.57% to $33.69 on heavy volume in early-afternoon trading on Monday, after a rating downgrade to "neutral" from "buy" at Citi.
The firm cut its price target to $38 from $45 on the stock.
The downgrade reflects lower kraftliner and corrugated medium prices. January kraftliner prices fell by 2.4% to $15 per ton, while corrugated medium prices declined by 3.7% to $20 per ton, according to Citi.
International Paper is a Memphis-based paper and packaging company. Its products include saturating kraft paper, and the company supplies corrugated packing solutions.
Although January's price cut could conceivably be a "'one and done' catch-up measure" and producers could potentially increase prices in spring or summer, these upside risks are balanced by the possibility of further price erosion, Citi wrote in a note.
During prior periods of price declines, list prices fell in "a disorganized fashion" for months, the firm pointed out. Low Old Corrugated Cardboard prices and a strong dollar pose further headwinds.
Investors who look to commodities to determine broader economic movements could interpret the slowdown in demand for kraft and corrugated paper as an indication of a global recession or major slowdown, TheStreet's Jim Cramer said on CNBC's Squawk on the Street this morning.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
International Paper's strengths such as its reasonable valuation levels and notable return on equity are countered by weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
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.