Could Analyst Downgrades and Sector Shifts Prompt a Rethink of International Paper's (IP) Margin Story?

• In recent days, International Paper completed the shutdown of two Georgia mills, reducing containerboard production capacity as sector sentiment weakened following a competitor’s profit warning and an analyst downgrade of the company’s outlook for near-term profits.
• Industry consolidation is expected to provide flexibility in adjusting production amid declining demand for cardboard boxes and ongoing market headwinds.
• We’ll explore how the sector-wide profit warning and analyst downgrade influence International Paper’s investment narrative, particularly regarding margin improvement and demand outlook.

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International Paper Investment Narrative Recap

To remain a shareholder in International Paper, you need to believe that the company can regain margin stability and earnings growth through optimizing production and capitalizing on industry consolidation, despite prolonged market weakness. The latest mill closures and negative sector sentiment may reinforce the biggest near-term risk, sustained demand softness for containerboard, while also putting pressure on margins. This may prolong any expected recovery, and the news is material to both the key catalyst and main risk for the business right now.

Among recent company announcements, management’s July 2025 update projecting “significantly higher” third-quarter earnings stands out. Set against four straight quarters of volume declines and fresh analyst downgrades, this guidance is under particular scrutiny as investors look for any turnaround signals amidst turbulent sector conditions and mounting margin pressure.

However, investors should be aware that if support fails to hold, margin recovery could face further setbacks and...

Read the full narrative on International Paper (it's free!)

International Paper's narrative projects $28.1 billion revenue and $2.0 billion earnings by 2028. This requires 8.6% yearly revenue growth and a $2.027 billion earnings increase from current earnings of -$27.0 million.

Uncover how International Paper's forecasts yield a $54.32 fair value, a 18% upside to its current price.

Exploring Other Perspectives

Three distinct fair value estimates from the Simply Wall St Community range from US$49.88 to US$84.26 per share. While some expect margin improvement from industry cost-outs, persistent weak demand remains a core concern shaping future performance and outlooks.

Explore 3 other fair value estimates on International Paper - why the stock might be worth just $49.88!

Build Your Own International Paper Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your International Paper research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free International Paper research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate International Paper's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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