Consumer products packaging maker Graphic Packaging International Inc. is aggressively reducing debt and overshadowing others in the industry, an analyst said Tuesday, initiating coverage of the company with an "Outperform" rating and pushing its shares up 11 percent.
Oppenheimer & Co. analyst Ian Zaffino said he expects Graphic Packaging to pay down $275 million in debt in 2009, while annual synergies from its buyout of Altivity Packaging LLC in March will allow it to cut an additional $50 million to $70 million per year.
The company will have $3 billion in debt at the end of this year, compared with $7 billion in 2003, Zaffino said.
Zaffino initiated a $5 price target for the company and said it is now the largest paperboard packaging company for food and beverages, while its revenue outperformed the industry by 300 basis points over the past year.
In afternoon trading Tuesday, shares of Graphic Packaging jumped 34 cents, or 11.1 percent, to $3.40, its highest point since February 2008. The stock has traded as low as 57 cents over the past year.