Ahead of the Bell: Graphic Packaging

Citi analyst initiates coverage of Graphic Packaging with 'Buy' rating

Associated Press

NEW YORK (AP) -- A Citi analyst on Friday initiated coverage of Graphic Packaging Holding Co. with a "Buy" rating, predicting "superior" cash flow growth over the next year.

Anthony Pettinari, who also set a $9 price target for the stock, said that price increases and cost cuts could also results in better-than-expected results. He added that the stock's current price also makes it an attractive investment.

The Marietta, Ga.-based company makes packaging for food and consumer products. Pettinari said he expects the company's increase in free cash flow to help it reduce debt and possibly allow for a dividend, acquisitions, or stock buybacks in 2014.

The analyst also projected more than $70 million in cost savings this year as Graphic Packaging integrates its recent acquisitions.

If the company is able to fully achieve certain cost-cut targets, Pettinari said its 2014 earnings could beat his prediction of 64 cents per share by between 5 and 8 percent.

Its shares finished at $7.35 on Thursday. They have traded in a 52-week range of $4.51 to $7.88.

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