Packaging Corp of America (NYSE: PKG) has been downgraded by Wells Fargo from “Overweight” to “Equal Weight,” with a revised price target of \$180. The downgrade reflects concerns over deteriorating fundamentals in the containerboard market, a more balanced risk/reward profile, and elevated valuation relative to historical averages and peers.
Analysts have adjusted their 2025 and 2026 EPS estimates to \$9.55 and \$9.05, respectively, and lowered EBITDA projections to \$1.75 billion and \$1.70 billion. The new price target is based on a 10.7x multiple of estimated 2026 EBITDA.
While Packaging Corp’s long-standing reputation for operational efficiency remains intact, the macroeconomic backdrop, including a sluggish packaging demand environment and high input costs, has led to tempered expectations for margin recovery in the near term.
💰 Dividend Fundamentals
📌 Annual Dividend: \$5.00 per share
📌 Dividend Yield: Approximately 2.67%
📌 Payout Ratio: 55.7%
📌 Dividend Growth: 0% over the past year
📌 Consecutive Years of Growth: 0 years
Packaging Corp’s dividend remains attractive for income-focused investors, but the lack of growth and a relatively high payout ratio could raise concerns if earnings compression continues. As the company navigates this transitional phase, shareholders may need to realign their expectations with a more conservative growth and income profile.