UPDATE: J.P. Morgan Initiates Graphic Packaging at Neutral (GPK)

J.P. Morgan is out with its report today on Graphic Packagining GPK, initiating GPK at Neutral. In a note to clients, J.P. Morgan writes, "We view GPK as a hybrid paper/packaging company given its primary products (paperboard), end markets (food/beverage) and financial/valuation characteristics (mix of both). The biggest challenge we see for GPK is near-term price/cost, given its price recovery time lag in a rising input cost environment. However, productivity has more than offset in recent quarters, evidence of solid management execution. After its recent stock performance (+45% YTD, group +23%), we think valuation (6.2x 2012E EBITDA) reflects GPK's hybrid status. That said, on a pullback, we could become more constructive on the shares. We initiate coverage at Neutral with a $6.00 December 2011 price target." Shares of GPK closed Monday at $5.65, down 0.70% from Friday's close.