Sector Snap: Pulp and paper companies

Analyst raises price targets, earnings estimates on pulp, paper companies as prices jump

• On 3:19 pm EDT, Wednesday September 2, 2009

NEW YORK (AP) -- Prices for a raw material used to make various grades of paper are experiencing a recovery "the likes of which have rarely been seen," an analyst said Wednesday.

Credit Suisse analyst C.A. Dillon III, in a client note, said prices for market pulp, as well as paper and paperboard, have "have weathered the deep recession better than expected."

In response to this summer's surprisingly strong uptick in prices, Dillon raised his earnings estimates and price targets on several companies in the sector, as well as his price forecasts for pulp and paper.

The analyst hiked his share price target on Domtar Corp. to $43 from $38 and his 2009 per-share estimate to a loss of $1.40 from a loss of $1.65.

He increased his price target on Packaging Corp. of America to $26 from $24 and his 2009 earnings-per-share estimate to $1 from 95 cents.

Dillon also boosted his price target on International Paper Co. to $26 from $24.

In afternoon trading, Domtar rose $1.42, or 4.3 percent, to $34.79, Packaging Corp. of America climbed 18 cents to $19.98 and International Paper Co. added 23 cents to $22.03.