Is International Paper (IP) a Buy Ahead of 2026? Contrarian Value and Earnings Momentum in a Shifting Packaging Sector

The packaging sector is at a crossroads. As global demand for sustainable materials accelerates and traditional pulp markets face cyclical headwinds, companies like International Paper (IP) are redefining their value propositions. With a "Moderate Buy" analyst consensus, a 16% average price target upside, and a strategic pivot toward high-margin sustainable packaging, IP presents a compelling case for investors willing to navigate near-term volatility for long-term gains. But is this the right time to buy?

Analyst Consensus and Price-Target Upside: A Contrarian Edge

As of August 2025, Wall Street analysts have split their views on IP, with 5 "Buy" ratings, 3 "Hold" ratings, and 1 "Sell." The average 12-month price target of $54.63 implies a 16.21% upside from the current price of $47.01. Notably, bullish analysts like RBC Capital's Matt McKellar ($63 target, 34% upside) and UBS's Anojja Shah ($60 target, 27.63% upside) highlight IP's structural advantages in the sustainable packaging boom. These price targets are underpinned by improving earnings and sales forecasts: IP is projected to report $0.56 EPS and $6.85 billion in revenue for the next quarter, reflecting confidence in its operational turnaround.

The "Moderate Buy" consensus contrasts with a minority of bearish calls, such as Wells Fargo's "Sell" rating at $43 (8.53% downside). However, the broader analyst community's accuracy in past recommendations—particularly from firms like UBS and RBC—lends credibility to the optimistic outlook. For contrarian investors, this divergence suggests a potential inflection point: the market may be underestimating IP's ability to capitalize on secular trends in sustainable packaging.

Earnings Momentum and Strategic Restructuring: A Foundation for Growth

IP's Q2 2025 results underscore its transformation. Net earnings of $75 million and adjusted operating earnings of $105 million reflect progress in its 80/20 operating system, which prioritizes efficiency and cost discipline. The company's focus on sustainable packaging—replacing plastic with paper-based alternatives like SpaceKraft containers—aligns with a $1.2 trillion global market expected to grow at 7.6% CAGR through 2030.

Strategic moves, including the $1.5 billion sale of its Global Cellulose Fibers unit and the integration of DS Smith, are accelerating this pivot. The DS Smith acquisition, which creates a $28.2 billion pro forma entity, enhances IP's pricing power and geographic diversification. Meanwhile, the closure of five box plants and a pulp mill—despite $395 million in restructuring costs—positions the company to save $110 million annually and reduce overcapacity in the North American containerboard market.

CEO Andy Silvernail's emphasis on "commercial excellence" is paying off: on-time delivery rates have surged to 97% in Q2 2025 from 92% in Q4 2024. These operational gains, combined with a $250 million investment to convert the Riverdale mill to containerboard, signal a disciplined approach to capital allocation.

Technical Signals: A Mixed Picture Amid Sector Volatility

The technical outlook for IP is nuanced. While the RSI at 64.736 suggests short-term overbought conditions, the 200-day moving average ($50.61) remains a bearish anchor, indicating long-term underperformance. The stock is currently trading near key support at $46.74, with resistance at $47.51 and $50.06. A break above $47.51 could trigger a rally, but a drop below $46.74 may deepen the correction.

The MACD and 5-day moving average (currently at $48.15) offer bullish signals, but the 50-day and 100-day averages ($46.97 and $48.77, respectively) suggest consolidation. This divergence highlights the tension between short-term momentum and long-term fundamentals. For patient investors, the current price near $47.01 represents a potential entry point if the stock holds its support level.

Macro-Driven Demand: Sustainable Packaging as a Tailwind

The shift to sustainable packaging is not just a trend—it's a regulatory and consumer imperative. IP's paper-based solutions, which are 100% recyclable and biodegradable, align with Extended Producer Responsibility (EPR) laws in the U.S. and Europe. These regulations favor companies that can offer high-recyclability materials, a domain where IP's corrugated packaging excels.

Moreover, the global sustainable packaging market is projected to grow to $448.53 billion by 2030, driven by e-commerce and consumer demand for eco-friendly alternatives. IP's 98% curbside recyclable product portfolio and innovations in traceable fiber sourcing position it to capture a significant share of this growth.

Risks and Rewards: A Calculated Bet

IP is not without risks. Mill reliability issues have cost $150 million in the first half of 2025, and EMEA volatility remains a concern. Additionally, the stock's technical indicators suggest caution for short-term traders. However, these challenges are part of a broader restructuring that is expected to yield $6 billion in EBITDA by 2027.

For investors with a 12–18 month horizon, the rewards outweigh the risks. The company's strategic clarity, operational discipline, and alignment with secular trends in sustainable packaging create a compelling long-term thesis. The key is to monitor technical levels and earnings execution in Q3 2025, when IP is expected to deliver "significantly higher earnings" due to volume growth and cost reductions.

Conclusion: A Buy for the Patient Investor

International Paper is a classic contrarian play. While the stock's technicals and near-term volatility may deter risk-averse investors, the fundamentals—strong analyst price targets, improving earnings, and a strategic pivot to sustainable packaging—paint a bullish picture for 2026. For those willing to ride through the noise, IP offers a rare combination of value and momentum in a sector poised for long-term growth.

Investment Advice: Consider initiating a position in IP at or near current levels, with a stop-loss below $46.74 to mitigate downside risk. Target a price range of $50–$55 over the next 12 months, aligning with analyst price targets and the company's EBITDA trajectory.