What Happened?
Shares of packaging and materials company International Paper (NYSE: IP) fell 3.5% in the afternoon session after Seaport Global Securities downgraded the stock to Neutral from Buy, citing valuation concerns.
The research firm expressed that the company's profit improvement timeline increasingly depended on 2027 results, with less of a positive influence expected in 2026. Seaport Global also noted that International Paper's strategic actions were becoming more dependent on its European operations, which could be complicated. Analyst Mark Weintraub pointed to several risks, many of which were macro-related and outside of management's control. Due to the stock's relative valuation, the firm suggested investors might find better value in other investments.
The shares closed the day at $45.89, down 2.7% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy International Paper? Access our full analysis report here.
What Is The Market Telling Us
International Paper’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 9.8% on the news that the company reported second-quarter earnings that widely missed analyst expectations.
The packaging giant posted an adjusted profit of $0.20 per share, falling well short of the 41 cents analysts forecasted. This marked a significant decline from the $0.55 per share reported in the same period last year. Company officials pointed to higher input costs, a heavy schedule of planned outages, and soft demand in Europe as the primary reasons for the reduced profitability. The weak bottom-line result overshadowed revenue figures that actually beat expectations, indicating investors focused on the hit to margins. The negative sentiment echoed across the packaging sector, as peers also reported weaker financial results.
International Paper is down 13.7% since the beginning of the year, and at $45.88 per share, it is trading 23.6% below its 52-week high of $60.09 from January 2025. Investors who bought $1,000 worth of International Paper’s shares 5 years ago would now be looking at an investment worth $1,128.
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