Packaging Corporation of America: Guidance Points To Significant Weakness Ahead

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Summary

  • Packaging Corporation of America shares dropped due to disappointing Q2 guidance, despite solid Q1 performance.
  • Management's downbeat Q2 guidance, driven by rising trade tensions and potential tariffs, signals significant cyclical headwinds and reduced demand.
  • PKG's strong balance sheet and prudent production cuts are positives, but the stock remains overvalued given the macroeconomic uncertainties and expected earnings decline.
  • I maintain a "sell" rating on PKG, with a revised fair value of $160-$165, reflecting limited upside and continued downside risks.
Boxes in storage

Jonathan Kitchen

After a strong 2024, shares of Packaging Corporation of America (NYSE:PKG) have been on a steady slide in 2025. The company reported disappointing Q4 results and has subsequently been caught up in the market sell-off, leaving shares up just marginally over

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