International Paper Company (NYSE: $IP) is an American paper company Based in Memphis, TN, and the world’s biggest pulp and paper company. It manufactures various paper products, including printing paper, stationary, packaging products, and specialty newsprint.
International Paper (IP) Shares Spike over 10% on New CEO News
On Tuesday, March 19, 2024, the company’s share price spiked over 10% after it named a new CEO, to become the top performer in the S&P 500 index.
According to the March 19 announcement, Andrew Silvernail will take over from Mark Sutton on May 1, 2024. Sutton will continue as board chairman to facilitate a “smooth and effective transition.”
Before joining International Paper, Silvernail worked as an investment advisor at KKR. Before that, he worked as CEO of IDEX Corporation and Madison Industries and is currently a board member at Stryker (SYK).
Commenting on his appointment, Silvernail said, “I want to thank the Board for their confidence in me. I look forward to working closely with the Board, Mark and our more than 39,000 employees worldwide as we continue to fulfill our vision of being among the most successful, sustainable and responsible companies in the world.”
International Paper Wins Ethisphere Award for the 18th Time
On Thursday, March 7, 2024, International Paper revealed that it had won the Ethisphere Award for the Most Ethical Companies in 2024. It marks the 18th time the company has won the award.
Commenting on the award, then-CEO Mark Sutton stated, “Our teams hold themselves to high ethical standards and shared principles of honesty, integrity and respect.”
IP Stock Is An Institutional Favorite
International Paper’s shares are majority-held by institutional investors. Whenever this happens, it is always worth looking at a stock. Financial institutions wield robust research capabilities, and thus, their ownership in a company is often closely watched by investors.
As of March 20, 2024, institutional investors own 84.14% of all IP shares and 84.57% of all the float. It is worth noting that IP shares have attracted 1,147 institutional investors, with Vanguard and Blackrock being the two largest institutional investors with 11.79% and 10.38% ownership stakes, respectively.
The large ownership stake in IP signals that analysts at these firms, with access to high-end analytic tools, have examined the stock and found it worth investing in.
IP Share Performance
International Paper (IP) shares closed trading 10.96% higher on Tuesday, March 19, at $ 38.77 per share. It signals investor optimism in the new CEO’s ability to change the company’s fortunes. When comparing IP stock against the S&P 500, it is evident that it has underperformed the broader market under Sutton.
In the past five years, IP stock has lost nearly 13% of its value, compared to the 84.90% gain of the S&P 500 in the same period. International Paper also saw a drastic decline in 2023 due to softer demand, declining sales, inventory problems, and rising inflation.
IP Stock Analysts’ Forecast
Commenting on the CEO change, Anthony Pettinari, an analyst at Citi, lauded the move. He also upgraded his rating for the stock from Hold to Buy and increased his price forecast from $36 to $46.
Michael Roxland, an analyst at Truist Financial, echoed similar sentiments. He expects Silvernail to launch new initiatives, including pursuing alternatives to underperforming units.
IP shares have an overall moderate Buy rating, based on the forecasts of 8 Wall Street analysts. They forecast a broad range for the stock, with a high of $43 and a low of $35. Their average target for IP shares is $38.87, a 0.26% upside based on Tuesday’s closing price.
Should You Buy IP Shares?
The company has been grappling with low demand recently and has been working to cut fixed costs. Additionally, it is working to improve its margins. International Paper has overcome some headwinds, and its balance sheet remains solid.
Thus far, its dividends have held steady, and the increase in cardboard pricing in 2024 should help boost cash flow. Successful execution of an orderly CEO change should help calm fears about its future.
The overwhelming ownership by major institutional investors also signals that its future is promising. Consequently, the moderate buy rating for IP stock accurately represents its near and medium-term performance.
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