IP: NORPAC Acquisition Closes, but There Could Be a NT Nippon Snag

研报英文原文证据摘录

IP: NORPAC Acquisition Closes, but There Could Be a NT Nippon Snag

Containers & Packaging Equity Research

Investment Thesis, Valuation and Risks

International Paper Company (IP)

Investment Thesis

IP has made step-change improvement to its NA operations over the past ~2 years, with a difficult macro obscuring the rate of change. We

also think investor expectations have shifted from quite elevated through much of 2024-25 to a bit depressed currently. YTD stock price

performance and our expectations of DD EBITDA growth in ’27 w/ clear path to much improved margin rates presents an attractive risk/

reward, in our view. As such, we rate the shares OW.

Target Price Valuation for IP

During 1999-2025, IP traded at an average FCF yield of 8.2% and an average EV/EBIT+DA multiple of 6.8x. Using our 2027 estimates, IP is

currently trading at a 4.9% FCF yield and 6.3x on an EV/EBIT+DA basis. We view a normalized trading multiple for IP as 7.25x EBIT+DA or a

4.0% FCF yield, implying a price target of $39 using our 2027 estimates.

Risks to Our Price Target and Rating for IP

Risks that could cause the stock to move away from our PT include significant shifts in raw material pricing, or a material slowdown

in demand such as by a resurgence in trade/geopolitical tensions. M&A also creates a risk for IP as it announced a recent acquisition in

Washington state while also seeking to spin-off its EMEA business. Additionally, the company is currently implementing transformative

self-help initiatives, with any missteps a potential drag on results or sentiment.

Companies Mentioned in Report

Company Name Ticker Last Price

(06/05/26)

International Paper Company IP $33.61

Source: Wells Fargo Securities LLC Estimates, FactSet

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