On Monday, Citi analysts adjusted their stance on Graphic Packaging (NYSE:GPK) Holding Company (NYSE:GPK), downgrading the stock from Buy to Neutral and reducing the price target to $30.00 from the previous $33.00.
The downgrade reflects concerns over potential pricing and cost pressures, modest organic volume growth, and what is seen as a fair valuation of the company's shares. Currently trading at $26.49 with a P/E ratio of 11.29, InvestingPro analysis suggests the stock is currently undervalued, despite showing high P/E relative to near-term earnings growth.
Graphic Packaging (NYSE:PKG), a leading provider of packaging solutions, is anticipated to release its full-year 2025 guidance during the fourth-quarter earnings report in early February. Citi estimates that the company could announce an EBITDA between $1.60 billion and $1.80 billion, with their projection at $1.735 billion compared to the consensus of $1.756 billion.
The company's current EBITDA stands at $1.747 billion for the last twelve months, with InvestingPro data showing a GOOD overall financial health score. Additionally, earnings per share (EPS) are expected to range from $2.40 to $2.90, with Citi's estimate at $2.60 versus a consensus of $2.66.
The analysts' expectations suggest a mid-single-digit percentage growth in both EBITDA and EPS. These projections take into account an estimated 1.5% increase in net organic volumes and a net positive impact of $100 million from performance, downtime, and foreign exchange factors. However, they are partially counterbalanced by an anticipated $10 million negative impact from price and cost dynamics, a $100 million decrease due to labor and benefits, and a $20 million reduction from mergers and acquisitions activities.
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