On Monday, Craig-Hallum maintained a Buy rating on Ranpak Holdings (NYSE:PACK) and increased its price target to $10 from the previous $8. The firm's analyst points to Ranpak's business model and growth trends as the basis for the positive outlook.
Ranpak, known for its environmentally friendly packaging solutions, has been recognized for its "razor/razor blade" business model, which the analyst believes presents a compelling investment opportunity. The company has faced various challenges in FY22 and early FY23, including headwinds and a complex macroeconomic environment. However, recent improvements signal a positive shift.
The analyst notes that despite earlier difficulties, the trends toward sustainability and automation—key aspects of Ranpak's business—remain strong. These long-term secular trends are expected to continue supporting the company's growth.
Improvements in the company's performance have been attributed to the end of destocking trends and a reversal in input cost pressures. These factors are contributing to better results and could potentially lead to an upward re-rating of the stock.
The new $10 price target is based on a 12x EV/EBITDA multiple applied to the firm's FY25 EBITDA estimate of $93 million. This adjustment reflects confidence in Ranpak's future performance and the robustness of its business model amidst changing market conditions.
InvestingPro Insights
With Ranpak Holdings (NYSE:PACK) capturing attention due to its business model and growth trends, real-time data and insights from InvestingPro can provide additional context for investors. The company's market capitalization currently stands at $649.4 million, and while it has faced profitability challenges with a negative P/E ratio of -24.04, recent performance indicators suggest a turnaround. Analysts are optimistic, forecasting net income growth this year, which aligns with Craig-Hallum's positive outlook.
Ranpak's stock price has experienced significant appreciation, with a 67.8% return over the last month and a 35.22% year-to-date return, indicating strong investor confidence. This momentum is also reflected in the stock trading near its 52-week high, at 95.16% of this peak. Despite the volatility, Ranpak's liquid assets exceed its short-term obligations, providing financial stability. With the company not paying a dividend, investors are likely focused on capital gains and the company's growth prospects.
For those considering an investment, there are additional InvestingPro Tips available, which can be explored for deeper analysis, including the stock's overbought status according to the RSI and the potential for profitability this year. To access these insights and more, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 12 InvestingPro Tips available, offering a comprehensive look at Ranpak's financial health and market position.
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