In a report released yesterday, Adam Josephson from KeyBanc reiterated a Hold rating on Clearwater Paper (CLW – Research Report). The company’s shares closed yesterday at $26.32, close to its 52-week low of $21.55.
“We are increasing our 2018 adjusted EBITDA estimate from $168M to $174M (implied guidance is $171M-$177M) and our 2019 estimate from $150M to $154M (consensus is $207M) as a result of the 3Q beat. However, we are reducing our free cash flow estimates for both years: in 2018, from ($25M) to ($101M), and in 2019, from $35M to $20M. As a result of these cash flow issues, CLW is planning to significantly reduce its recurring (maintenance plus strategic capital) capex spending, from ~$75M in years past to ~$30M in 2019 and perhaps beyond. Reducing capex out of necessity is obviously a sub-optimal scenario, but one necessitated by the $380M-$390M that CLW is spending on Shelby. For 2019, we are assuming a $20M EBITDA decline. Maintenance outage expense will be $20M-$30M higher next year, a major hurdle that CLW will have to overcome.”
According to TipRanks.com, Josephson is a 4-star analyst with an average return of 7.2% and a 65.2% success rate. Josephson covers the Consumer Goods sector, focusing on stocks such as International Paper Co, Avery Dennison Corp, and Graphic Packaging.
The word on The Street in general, suggests a Hold analyst consensus rating for Clearwater Paper with a $35 average price target.
Clearwater Paper’s market cap is currently $451.9M and has a P/E ratio of 4.78. The company has a Price to Book ratio of 0.73.
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Clearwater Paper Corp. engages in the manufacturing and selling of private label tissue, paperboard, and pulp-based products. It operates through the Consumer Products and Pulp and Paperboard segments. The Consumer Products segment manufactures and sells a complete line of at-home tissue products as well as Away From Home products.