IP: Portfolio Refocus And Facility Closures Will Drive Margin Upside

Analysts have trimmed their fair value estimate for International Paper from $63.00 to $57.80 per share. More cautious revenue growth assumptions are offset only partly by improved margin expectations and a lower projected valuation multiple, even as recent research highlights both tangible portfolio actions and lingering skepticism on the pace of the turnaround.

Analyst Commentary

Recent Street research presents a mixed but gradually improving narrative around International Paper, with some bullish analysts pointing to a clearer path to earnings recovery and value realization. While skepticism remains on the timing of the turnaround, the range of updated views underscores that execution on portfolio simplification and margin enhancement is starting to influence sentiment.

Bullish analysts argue that the new leadership team is moving with greater urgency to reposition the portfolio and unlock underappreciated asset value. The announced divestiture of the Global Cellulose Fiber operations for $1.5B is cited as a concrete step that both strengthens the balance sheet and sharpens the focus on higher return, core packaging assets.

On the other side, more cautious voices highlight that expectations for containerboard demand recovery and pricing remain fragile, with current valuations still embedding a meaningful degree of cyclical improvement. These analysts emphasize that the story is extending further into 2027 and beyond, with a heavier reliance on strategic actions in Europe that may prove harder to execute at scale or on the intended timetable.

Overall, the Street now reflects a wider dispersion of views, with target prices spanning from the mid 40s to the high 50s per share. This spread captures both the downside risk from a slower macro and pricing backdrop, and the upside optionality if management delivers on its cost, portfolio, and capital allocation agenda faster than currently modeled.

Bullish Takeaways

• Bullish analysts highlight that a Buy rating at a target price of $57.80 implies meaningful upside from current levels, reflecting growing confidence that management can convert strategic portfolio moves into sustained profit and margin improvement.
• The sale of the Global Cellulose Fiber business for $1.5B is viewed as a valuation unlock that reduces earnings volatility, tightens strategic focus on core packaging, and enhances financial flexibility to reinvest or return capital.
• Upward revisions to bullish price targets in the mid 50s, even when trimmed, suggest that the long term earnings power of the restructured portfolio is underappreciated, particularly if efficiency gains and capacity rationalization support stronger through cycle margins.
• Positive commentary around a potential pricing inflection in containerboard, including expectations for a future price increase, is seen as a catalyst that could accelerate EBITDA growth and narrow the discount to peer valuations if demand trends normalize.

What's in the News

• The company announced the closure of packaging facilities in Compton, California and Louisville, Kentucky by January 2026, affecting 218 employees and consolidating production into other locations as part of a broader footprint streamlining strategy (Company announcement).
• The company revised its 2025 guidance to target approximately $24 billion in net sales, indicating expectations for continued top line scale as the portfolio is repositioned toward sustainable packaging (Company guidance).
• The company reported completion of the existing share repurchase authorization, with 14.26 million shares bought back for approximately $537 million since the program began in 2021, representing about 4% of shares outstanding (Company filing).
• The company extended and amended the Riverdale Mill Supply and Offtake Agreement with Sylvamo, including a phased wind down of supply through May 2026 and the transfer of sheeting assets for a nominal purchase price, as International Paper prepares to cease paper production at the site (Client agreement disclosure).

Valuation Changes

• Fair Value Estimate was reduced from $63.00 to $57.80 per share, signaling a moderate downward adjustment to intrinsic value.
• The Discount Rate increased slightly from 7.20% to 7.52%, reflecting a modestly higher required return and risk assessment.
• Revenue Growth was lowered significantly from about 12.0% to approximately 3.3%, indicating a more conservative outlook for top line expansion.
• Net Profit Margin was raised meaningfully from roughly 9.5% to about 15.5%, incorporating stronger expectations for future profitability.
• The Future P/E was cut substantially from 17.2x to about 9.2x, implying a lower valuation multiple on projected earnings.