Clearwater Paper (CLW) is showing "greenshoots" in solid bleached sulfate, or SBS, paperboard following its Q2 results, RBC Capital Markets said in a Wednesday note.
The note said its Q2 adjusted EBITDA was below consensus but within the company's guidance range, while the mid-point of Q3 guidance was above consensus.
The report said the SBS paperboard showed "somewhat" improving conditions although benchmark price increases will take time to follow through amid some costs pressures.
"We expect supply-demand balance will likely continue to improve somewhat on lower imports and substitution between paperboard grades," the note said.
"We continue to view the stock as cheap," it said. RBC raised its price target to $21 from $19 and kept its outperform rating.
Price: $21.37, Change: $+3.86, Percent Change: +22.04%