Analyst Note| Charles Gross |
Unsurprisingly, International Paper's fourth quarter was a mixed bag. Paper demand remains anemic, with many students and white-collar workers stuck at home. However, packaging demand remained robust as people purchased a larger share of goods online. Altogether, quarterly sales fell by roughly 5%, and adjusted operating earnings dipped by over 30% year on year. Both figures are ultimately poised to rebound over the coming two years as coronavirus vaccinations become prevalent and economic conditions normalize. We have raised our fair value estimate to $49 per share from $46, mainly due to the time value of money. Our no-moat rating is unchanged. Shares look fairly valued, trading firmly in 3-star territory.