Key Moments
- J.P. Morgan placed International Paper (NYSE:IP) on Negative Catalyst Watch ahead of its April 30 results, citing cost headwinds and a 21% gap versus Q2 2026 EBITDA consensus.
- The bank cut its FY 2026 EBITDA forecast for International Paper to $3.33 billion and lowered its December 2027 price target to $46, while keeping a “neutral” rating.
- Smurfit WestRock, Packaging Corp of America, and Mondi also saw estimate and target revisions as J.P. Morgan recalibrated assumptions on linerboard prices and energy costs.
J.P. Morgan Turns Cautious on International Paper
Investing.com — J.P. Morgan has added International Paper (NYSE:IP) to its Negative Catalyst Watch list ahead of the company’s quarterly earnings release scheduled for April 30, highlighting what it sees as more acute cost pressures relative to peers and a significant shortfall versus market expectations for 2026 earnings.
The firm pointed to a 21% shortfall versus consensus for International Paper’s Q2 2026 EBITDA, underscoring its more pessimistic stance on the company’s near-term profit trajectory.
EBITDA Forecasts Lag Guidance and Street Expectations
For Q1 2026, J.P. Morgan projects EBITDA of $679 million for International Paper. That compares with Bloomberg consensus of $730 million and the company’s own guidance of $755 million, placing the bank 7% below consensus and 9% below management’s outlook.
The gap widens further in Q2 2026, where J.P. Morgan estimates EBITDA of $614 million versus a consensus view of $775 million.
“Into the print, we see the most downside risk for International Paper,” J.P. Morgan said.
Revised Long-Term Estimates and Valuation
In its updated model, J.P. Morgan reduced its FY 2026 EBITDA forecast for International Paper by 5.6% to $3.33 billion. The bank also cut its December 2027 price target on the stock to $46 from $48, while reiterating a “neutral” rating. International Paper shares closed at $35.66 on April 1.
European Strategy and Energy Costs Under Scrutiny
A key element of J.P. Morgan’s more cautious stance is International Paper’s “short paper” approach in Europe, under which the company buys linerboard from external suppliers rather than being fully integrated.
The report noted that as European natural gas prices nearly doubled following the start of the Middle East conflict, linerboard prices moved higher. This development benefited integrated competitors but weighed on International Paper, which relies on purchased linerboard.
“Rising paper prices to offset energy cost inflation represent a headwind for IP that other players do not have,” Winckelmann said. J.P. Morgan also highlighted that International Paper hedged less of its European natural gas exposure for Q1 than Smurfit WestRock.
Incremental Weather Costs Add Further Pressure
J.P. Morgan also cited higher-than-anticipated weather-related expenses in Q1. International Paper had initially guided to weather costs of $20m-$25m, but subsequently revised that range to $40 million-$50 million.
Impact of Linerboard Pricing Assumptions
The decision to place International Paper on Negative Catalyst Watch is part of a broader recalibration of estimates across the sector. J.P. Morgan noted that U.S. linerboard prices increased by $20/t in March, compared with its prior assumption of a $40/t rise. The bank’s updated framework assumes no additional price increases for 2026.
Sector-Wide Revisions: Smurfit WestRock, Packaging Corp, and Mondi
Alongside its changes to International Paper, J.P. Morgan adjusted estimates and targets for several other names in the space.
| Company | Rating | New Price Target | Prior Price Target | FY 2026 EBITDA (New) | Change vs Prior | Key Quarterly Estimate |
|---|---|---|---|---|---|---|
| Smurfit WestRock | “overweight” | $64 | $68 | $5.17 billion | -1.4% | Q2 EBITDA of $1.23 billion, 5.7% below consensus |
| Packaging Corp of America | “overweight” | $225 | $250 | $2.08 billion | -3.8% | Q1 EPS estimate of $2.21, 1.7% above consensus |
| Mondi | “neutral” | 990p | 900p | €914 million | -0.5% | Linerboard price increases seen offsetting energy costs |
For Smurfit WestRock, which remains rated “overweight,” J.P. Morgan cut its FY 2026 EBITDA forecast by 1.4% to $5.17 billion and reduced its price target to $64 from $68. The bank’s Q2 EBITDA estimate of $1.23 billion is 5.7% below consensus.
Packaging Corp of America, also rated “overweight,” saw its price target reduced to $225 from $250. J.P. Morgan lowered its FY 2026 EBITDA projection by 3.8% to $2.08 billion. The firm’s Q1 EPS estimate for the company stands at $2.21, which is 1.7% above consensus.
For Mondi, rated “neutral,” J.P. Morgan raised its price target to 990p from 900p, noting that higher linerboard prices are helping to offset energy cost pressures. The bank trimmed its FY 2026 EBITDA estimate by 0.5% to €914 million.
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