GPK - Graphic Packaging gains after UBS calls out near-term rally potential

UBS lifts its rating on Graphic Packaging Holding Company (GPK +2.7%) to Buy from Neutral as it points to positive sustainable organic growth trends. The firm estimates that the current boxboard inflection is not priced in. Analyst Cleve Rueckert: "GPK is growing its exposure to the faster growing European market with the recently closed AR Packaging acquisition, increasing Europe's revenue contribution to 26% in 2022 from 12% in 2019 on our estimates. We forecast 1.5% and 2.5% volume growth respectively in North America and Europe next year will drive 325bp of margin expansion on the back of recent price hikes." UBS sets 2022-2023 EPS estimates on GPK at about 7% above the consensus marks and is constructive on the longer-term fundamentals of the core businesses. The new 12-month price target from UBS on GPK is $25 vs. the average analyst PT of $23.85.

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Graphic Packaging gains after UBS calls out near-term rally potential