CIBC Capital Markets maintained its neutral rating on the shares of Cascades (CAS.TO) and cut its price target to C$13.00 from C$14.00 after the company reported its first quarter results on May 7.
CIBC remains on the "sidelines given sluggish industry demand for corrugated," it said and added, that being said, it expects CAS' risk profile to improve as Bear Island ramps up further and leverage trends lower.
"We see net debt/EBITDA declining from 3.3x as of Q1 to 2.8x by year-end and 2.2x by the end of 2027," said analyst Hamir Patel. "Additionally, CAS appears to be delivering on portfolio rationalization, including targeting ~$230MM of redundant assets sales over 2025-Q3/26 ($149MM achieved to date), as well as $100MM in profitability improvements by year-end 2026 from 2024 levels ($30MM achieved in 2025)."
CIBC maintained its rating on Cascades, while reducing its price target on lower estimates, it said.
CIBC is reducing 2026/2027 EBITDA Estimates By 11%/5%, it said.
"We have lowered our 2026 and 2027 estimates by $66MM and $35MM, to $545MM and $620MM, respectively, largely reflecting weaker Containerboard segment assumptions," Patel added.
Hamir Patel said over the past week, the "top three NA containerboard producers announced price hikes effective June 1, including International Paper (+US$70/ton), Smurfit WestRock (+US$50/ton) and PCA (+US$50/ton)".
"Georgia-Pacific and Pratt Industries followed suit this week, while Cascades also announced US$60/ton hikes for liner and US$70/ton for medium," Patel said.. "This second industry pricing initiative follows the US$50/ton net hike realized across the industry earlier this year, with benchmark linerboard prices reaching US$995/ton (+5% YTD)."
According to Pulp & Paper Week (PPW), CIBC noted, producers have cited higher manufacturing costs, as well as surging oil, fuel and transportation expenses. PPW recently characterized NA box demand as "steady at best" over the past six months, said CIBC but added that conditions appear to have improved in March and April, with U.S. shipments rising 3.4% in March.
"That said, industry participants remain cautious, as the ongoing conflict in the Middle East could weigh on consumer confidence and spending, further dampening demand," added CIBC. "On the supply side, the backdrop remains more constructive, supported by significant U.S. containerboard industry capacity rationalization [~10% of capacity (~3.6MM tons) removed since February 2025]."
Price: $10.59, Change: $-0.19, Percent Change: -1.76%