Sector Snap: Paper and Packaging
NEW YORK (AP) — Shares of paper and packaging companies that make containerboard rose Friday as an analyst upgraded his ratings for four of them, saying that containerboard price hikes are more likely to be successful than he previously thought.
This is an about face from last week, when Mark Wilde of Deutsche Bank cut his ratings for International Paper Co., Rock-Tenn Co., Packaging Corp. of America and KapStone Paper and Packaging Corp. to "Hold" from "Buy." On Friday he lifted the companies' ratings back to "Buy."
Admitting in a client note that he was eating a bit of crow, Wilde said that he now believes there is a 75 percent to 80 percent chance of a containerboard price increase. A week ago he said it was only about 50 percent.
Wilde said that it was hard for him to keep his conservative stance when inventories in August dropped to their lowest level in decades.
"We don't like moving stock calls around rapidly, but we like being wrong even less. If the situation changes and you find yourself on the wrong side of an argument, it's best to own-up and move forward," he wrote.
In afternoon trading, International Paper shares rose 93 cents, or 2.7 percent, to $35.64; Rock-Tenn gained $2.16, or 3.2 percent, to $69.52; Packaging Corp. of America climbed 66 cents, or 2 percent, to $33.70; and Kapstone Paper and Packaging added $1.56, or 8.1 percent, to $20.90.