-- CIBC Capital Markets maintained its neutral rating on the shares of Winpak (WPK.TO) and cut its price target to C$47.00 from C$52.00 after the company reported its first quarter results on Wednesday.
"We maintain our Neutral rating on Winpak, while moderating our price target to $47 (from $52) on lower estimates and a 0.25x reduction in our EV/EBITDA valuation multiple (now 6.5x 2027E)," said CIBC. "We remain on the sidelines pending greater visibility on the upcoming USMCA renewal, headwinds from rising resin prices and WPK's ability to achieve sustainable volume growth."
While Winpak does not host an earnings call and the company's "prepared remarks skewed quite cautious," WPK noted that customer shipments accelerated in the second half of Q1, said CIBC and added that after speaking with management, it "largely remain comfortable" with its estimates for the remainder of 2026.
"Winpak reported EBITDA of (US)$54MM, well below our forecast of (US)$60MM and consensus of (US)$59MM," noted CIBC. "Adjusted EBITDA margins of 19.2% (CIBCe 20.5%) were ~120 bps lower Y/Y."
CIBC's 2026 EBITDA estimate decreases 3% to US$237MM following the Q1 miss and reductions to CIBC's Q2-Q4 margin assumptions, partially offset by higher selling prices, it added. CIBC's 2027E EBITDA moves 4% lower to US$255MM on "modest reductions" to volume/margin assumptions, as well as expectations for deflationary pressure on selling prices, it further said.
"We see volumes growing 2.0% in 2026E (vs. -1.0% in 2025), with growth accelerating in 2027E to 4.1% with the ramp-up of WPK's new capacity and share gains with CPG customers," CIBC added.
On the pricing side, "with Middle East conflict-related supply disruptions leading to upward pressure on key inputs like resin", CIBC expects pricing comps to be up 15% in 2026, vs. +0.8% in 2025, before seeing deflationary pressure in 2027E of -10% as supply constraints ease, said CIBC.
For EBITDA margins, CIBC expects levels to average 18.0% in 2026 amid rising raw material costs, before rebounding to 20.5% in 2027.
"During the 2021/2022 supply chain disruptions and resulting inflationary pressures on raw material prices, WPK saw EBITDA margins dip to 16%-19% given the lag on passing through costs on indexed business," noted CIBC. "Roughly 75% of WPK's business is covered by contractual indexing programs for raw materials (average three-month lag)."
Price: $39.97, Change: $-0.19, Percent Change: -0.47%