JP Morgan Comments On Boise Following Q1 Earnings Release

Boise's BZ 1Q was somewhat anti-climatic, with results in line and no resolution on warrant capital allocation yet. JP Morgan still sees several catalysts ahead, none of which are in its numbers yet. Valuation remains inexpensive, which assumes full warrant dilution but no upside from associated capital allocation. Boise reported 1Q EPS of $0.22, with in-line operating results. For 2Q, the company said it will have $15mm in total maintenance spend as well as incremental input cost headwinds for chemicals/fuel, both of which were factored into JPM's model. Boise noted today that it followed UFS in announcing a $60/ton price increase on cut-size/opaque UCFS. JP Morgan has not factored this increase into its model, given recent pricing weakness, but full realization could add $0.30 in 2012E EPS. JP Morgan has lowered its EPS for 2011-12E to $0.83 and $0.90, respectively, which accounts for the full impact of the warrant share issuance and no longer assumes offsetting buybacks. Its EBITDA estimates, however, are essentially unchanged. JP Morgan has an $110.50 PT and Overweight rating on BZ Boise closed Monday at $8.88