A Surprising Vote of Confidence for International Paper Shares

In a notable shift of sentiment, one major investment bank has dramatically altered its outlook for International Paper, injecting fresh optimism into the discourse surrounding the packaging giant. This development arrives as the company navigates a period of disappointing earnings and contracting profit margins. The central question for investors is whether this signals a genuine turning point or merely a temporary rally.

Despite the challenging fundamental backdrop, significant institutional players are demonstrating faith in a potential recovery. During the second quarter, Handelsbanken Fonder AB substantially increased its stake in International Paper by a remarkable 196 percent. Its holdings are now valued at approximately $6.14 million. Overall, institutional investors control a dominant 82 percent of the company's shares, a strong indicator that major market participants are betting on the long-term prospects of this packaging specialist.

The Analyst Reversal Explained

The source of the renewed attention is a decisive rating upgrade from BNP Paribas Exane. The bank executed a striking about-face, lifting its recommendation from "Underperform" to "Outperform." More significantly, it established a new price target of $44 per share. This projection suggests a potential upside of nearly 17 percent from the recent closing price. This optimistic stance stands in contrast to the broader analyst consensus, which remains at a neutral "Hold" rating, albeit with a higher average price target of around $50.62.

Should investors sell immediately? Or is it worth buying International Paper?

Context of Recent Financial Performance

This upgraded outlook comes at a critical juncture for International Paper. The company's most recent quarterly report for Q3 2025 fell significantly short of market expectations. It posted a loss of $0.43 per share, with revenue landing at $6.22 billion. A particularly concerning metric was the sharp decline in its operating margin, which plummeted from a positive 3.7 percent in the same quarter the previous year to a negative 10.8 percent.

Balancing Dividends and Market Realities

Amid these operational headwinds, International Paper continues to offer shareholders an attractive quarterly dividend of $0.4625 per share. However, the company's ability to sustain this payout hinges on improving its core business performance. The current share price is hovering just below its 52-week high, which may indicate that the market has already priced in the recent positive news from BNP Paribas.

The upcoming quarterly earnings reports will be crucial. They will reveal whether the optimism from this prominent bank and institutional investors is well-founded or if International Paper continues to grapple with the persistent structural challenges within the paper and packaging industry.