Silgan and International Paper Receive Upgrade from Bank of America Securities on Valuation and Pricing Concerns.

Bank of America Securities upgraded Silgan Holdings and International Paper to Buy from Neutral, citing attractive valuations and stronger-than-expected containerboard pricing. The call follows a volatile Q2 earnings season, and the firm expects operational headwinds to be offset by pricing gains.

Bank of America Securities has upgraded both Silgan Holdings (SLGN) and International Paper (IP) to a "Buy" rating from "Neutral," citing attractive valuations and stronger-than-expected containerboard pricing. This move comes after a challenging second quarter for the packaging and paper sector, with BofA analysts noting a 5% decline in sector stocks compared to the S&P 500.

For Silgan, the analysts cited a recent decline in stock price as an attractive entry point. The company is trading at an 11-12x price-to-earnings ratio on estimates of 25-26, with an implied flattish growth rate. While Silgan faces weak beverage-closure volumes and food can customer bankruptcy issues, the analysts believe that these challenges may be offset by potential improvements in volumes.

International Paper, on the other hand, was upgraded due to pricing as the key driver of upside. The analysts expect operating rates to be over 95% in 2026 and have increased their containerboard price forecasts by an additional $40/ton for the third quarter of 2026. This increase, along with the existing $40/ton increase in the first quarter, exceeds consensus expectations of $20-30/ton.

BofA also reiterated its broader view of the sector, noting that equities in the sector were once seen as akin to bonds due to their good cash flows but limited growth. The analysts now expect the sector to benefit from stronger pricing dynamics and improved operational rates.

References:
[1] https://finance.yahoo.com/news/bofa-upgrades-silgan-international-paper-133843803.html