J.P. Morgan has put International Paper (IP) on Negative Catalyst Watch in advance of the paper producer's April 30 quarterly results, warning that IP faces greater cost pressure than many of its competitors and highlighting a substantial shortfall versus analyst consensus into mid-2026.
The bank's estimate for IP's Q1 2026 EBITDA is $679 million, which sits 7% below the Bloomberg consensus of $730 million and 9% under IP's own guidance of $755 million. The gap becomes more pronounced in J.P. Morgan's projection for Q2 2026, where the firm forecasts EBITDA of $614 million versus a consensus view of $775 million - a roughly 21% divergence from the consensus figure.
"Into the print, we see the most downside risk for International Paper," J.P. Morgan said in its note, underlining its caution ahead of the quarterly report.
Following the revisions, J.P. Morgan reduced its full-year 2026 EBITDA estimate for IP by 5.6% to $3.33 billion. The brokerage also trimmed its December 2027 price target for the stock to $46 from $48 while retaining a "neutral" rating on the shares. IP stock closed at $35.66 on April 1.
At the center of J.P. Morgan's near-term concern is IP's approach in Europe, where the company purchases linerboard externally under a so-called "short paper" strategy rather than relying on fully integrated production. The brokerage argued this sourcing mix left IP more exposed to rising linerboard prices, which increased as European natural gas prices jumped nearly twofold following the onset of the Middle East conflict.
Higher paper prices have acted as a partial counterbalance to energy-driven cost inflation for vertically integrated peers, but that effect has been unfavorable for IP, J.P. Morgan said. Analyst Winckelmann added that increasing paper prices to offset energy cost inflation represent a distinct headwind for IP that some other players do not face. The note also flagged that IP hedged less of its European natural gas exposure for Q1 than peers such as Smurfit WestRock.
Weather-related expenses were another factor lifting costs in Q1. IP initially indicated weather impacts of $20 million to $25 million at the time of its guidance but later revised that estimate upward to a range of $40 million to $50 million.
J.P. Morgan's placement of IP on watch occurred amid a broader round of estimate downgrades tied to a softer U.S. linerboard pricing environment. The brokerage noted a lower-than-expected March U.S. linerboard price increase of $20 per tonne, down from a prior assumption of $40 per tonne, and currently assumes no additional price increases for 2026.
The firm also updated outlooks for several peers. Smurfit WestRock, which J.P. Morgan rates "overweight," saw its price target cut to $64 from $68 and its FY 2026 EBITDA estimate trimmed 1.4% to $5.17 billion; the firm's Q2 EBITDA projection of $1.23 billion sits 5.7% below consensus.
Packaging Corporation of America, also rated "overweight," had its price target reduced to $225 from $250 and FY 2026 EBITDA lowered 3.8% to $2.08 billion. J.P. Morgan estimates Q1 EPS for Packaging Corp of America at $2.21, about 1.7% above consensus.
Mondi was assigned a "neutral" rating but saw its price target increased to 990p from 900p, as linerboard price rises helped offset energy cost pressures; J.P. Morgan's FY 2026 EBITDA estimate for Mondi was little changed, down 0.5% to 914 million.
Separately, the report referenced MNDI in a coverage note context. The brokerage's revisions reflect differing exposures across the packaging and paper complex to energy costs, paper sourcing strategies, hedging positions and weather disruptions.
Investors will be watching International Paper's April 30 release closely for confirmation of J.P. Morgan's concerns and to see how the company addresses the combination of sourcing, hedging and weather-related cost pressures.