International Paper Gains on Forecast Upgrade

International Paper (IP.US), a global leader in paper packaging, is experiencing significant gains for the second consecutive session, although recent volatility should be noted. The company, headquartered in Memphis, Tennessee, employs over 65,000 people and operates in more than 30 countries worldwide. These gains are largely attributed to new management strategies, the integration with DS Smith, a company acquired in February of this year, and a recovery in the packaging market.

Significant Price Increases

• International Paper's stock saw a substantial increase of 6.0% during today's session, the largest gain in 21 weeks. It's worth noting that the company has only grown by 4% this year (though still better than the S&P 500 index), while over the past 52 weeks, it has risen by 37%. Trading volume during today's session was three times higher than the 20-day average, according to Bloomberg data. This increase is partly due to positive forecasts for 2025 and the success of CEO Andy Silvernail's management strategy.
• International Paper presented forecasts for 2025, projecting revenues of approximately $27 billion, surpassing analysts' expectations. The company also expects adjusted EBITDA to range from $3.5 to $4 billion in 2025.

Recent consolidated forecasts from Bloomberg indicate revenues of around $24.5 billion this year, making the management's new projections significantly optimistic. Source: Bloomberg Finance LP

Management Strategy and DS Smith Integration

• 80/20 Strategy: International Paper has implemented an 80/20 strategy, aimed at increasing profitability by aligning costs with contract profitability. This strategy may lead to production capacity rationalization and price increases for valuable customers.
• DS Smith Integration: In February 2025, International Paper finalized the acquisition of DS Smith, strengthening its position in Europe and the sustainable packaging market. This integration aims to create a leader in the North American and EMEA regions.

Future Outlook

• Profitability Growth: The company plans to increase the profitability of its business over the next few years. This ambitious goal can be achieved through the 80/20 strategy and the integration with DS Smith.
• Investments and Share Buybacks: International Paper plans to use its balance sheet to invest in new production facilities and buy back shares from the market, which could potentially support stock value growth.
• Long-Term Forecasts: By 2027, the company expects to achieve adjusted EBITDA in the range of $5.5 to $6 billion and free cash flow of $2 to $2.5 billion.

As seen, the company's performance has been mixed. In recent years, there have been quarters with reported losses, while a significant decline in revenue has been observed for some time. However, the company intends to increase revenue and profitability through its new strategy and acquisitions. The current P/E ratio is around 40 points, while the Forward P/E is already at 20. With a stock price of $56, the company boasts a dividend yield of 3.3%.