Packaging Corp Defended By Sell-Side Following Reported Fire Explosion

Shares of Packaging Corp Of America (NYSE: PKG) fell more than 2 percent after a report said three people were dead following a fire explosion at its plant in Beauregard.

A company spokesperson told Benzinga details are still coming in and the company will issue a press release this afternoon.

Sell-side analysts have defended Packaging Corp, saying the accident wouldn't cause much of an impact as the company has business interruption insurance to limit the financial damages and the fire was in a secondary tank.

Jefferies says the fire was on a waste water pump and will not impact production at all. Buckingham, too, expects the incident to not have much impact on the company or containerboard pricing, as the explosion was in smaller secondary tanks.

Wells Fargo also defended Packaging Corp. saying the company carries business interruption insurance for any limiting any financial losses. But, the brokerage noted that the issue may hit the already burdened containerboard market.

“Clearly, the situation is fluid and implications far-reaching. That said, we believe this exerts further stress on a containerboard market that is already supply constrained,” Wells Fargo said.

On the news, shares of other players in the industry also reacted in the following way:

• KapStone Paper and Packaging Corp. (NYSE: KS) slipped 1.12 percent to $23.92.
• International Paper Co (NYSE: IP) rose 1.82 percent to $53.08.
• WestRock Co (NYSE: WRK) were up 0.90 percent to $53.98.
• Graphic Packaging Holding Company (NYSE: GPK) rose 2.87 percent 

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