Wells Fargo has revised its stance on International Paper (NYSE: IP), raising the stock from Underweight to Equal Weight and increasing its price target to $40.00 from $36.00. The brokerage's reassessment reflects what its analyst, Gabe Hajde, describes as "step-change improvements" to International Paper's PSNA operations over the past approximately two years.
The firm’s earlier bearish view was grounded in concerns over "lofty expectations and targets," particularly the complexity of operating across two distinct markets. Wells Fargo now aligns with International Paper management's view that the regions function more effectively as separate businesses and sees the company's current share price as offering a "more balanced risk/reward profile."
As part of its re-evaluation, Wells Fargo switched to a sum-of-the-parts valuation framework. The bank also adjusted its total-company EBITDA projections, raising estimates to $3.4 billion for 2026 and $4.0 billion for 2027. Those revised projections underpin the upgraded rating and higher price target.
These analyst moves come alongside International Paper's disclosure of fourth-quarter 2025 financial results. The company posted earnings per share of -$0.08, falling short of the consensus expectation of $0.27 and producing a negative surprise of 129.63%. Revenue for the quarter was $6.01 billion, modestly above the expected $5.92 billion. The divergence between the EPS shortfall and revenue outperformance presents a mixed picture for stakeholders.
Wells Fargo's change in valuation method and the revised EBITDA outlook suggest the research team believes operational trends in PSNA have improved sufficiently to alter long-term earnings expectations. At the same time, the sizeable EPS miss in the most recent quarter will likely keep investor and analyst attention fixed on near-term profitability and cost dynamics.
Investors and market watchers are likely to scrutinize subsequent company updates and quarterly reports for confirmation that the operational progress continues to translate into improved financial performance. The juxtaposition of a raised price target and an earnings shortfall highlights the interplay between medium-term operating assumptions and short-term financial results.