Improved Pricing Power Benefits Graphic Packaging (GPK)

Jefferies has published its research report today on Graphic Packaging GPK and notes that "improved pricing power" will lead to upside for GPK. In a note to clients, Jefferies writes, "Benefiting from tight market conditions (95+% operating rates), we believe GPK should continue to see good pricing momentum in its paperboard business. While the company has yet to see recent price increases flow through due to the la (nine month average) in its folding carton business, we believe earnings should accelerate sharply in 2011 as the price escalators kick-in. We have already seen an inflection point in price during 3Q10 and we expect the negative price cost spread to narrow over the next few quarters." GPK closed yesterday at $3.72.