IP Reports Today as Peers Rally and Index Removal Looms

International Paper fell 0.9% on the week to $33.38 while its closest packaging peers posted a median gain of 2.2%, a gap that frames what has become the central question for the stock: why is the market pricing this so far below where the Street says it belongs?

The earnings print landed today, October 28, so that gap gets tested immediately. The last time IP reported, in July, the stock fell 4.2% on the day and another 0.7% through the following week. Q3 matters for a different reason too. Analysts have been cutting targets into this print at an unusual rate. Truist dropped to $41 from $49 on October 12, Wells Fargo moved to $42 from $46 on October 7, and UBS cut to $35 from $47 on October 5. All three maintained their ratings. That pattern, ratings held but targets taken down sharply, reflects analysts who still believe in the recovery thesis but have become more cautious about the pace of it. The consensus buy rating at a mean target of $45.40 implies roughly 36% upside from current levels. JP Morgan sits at the bullish extreme with a $62 target, reiterated on September 23. The size of that gap between price and consensus is unusual, and it either reflects a deeply undervalued stock or a set of targets that haven't caught up with a deteriorating outlook.

Short interest adds a layer of context. At 8.8% of the free float and up about 2% on the week and 5% over the past month, the short book has been quietly building. That said, the borrow market shows no sign of stress. Cost to borrow has eased 7.6% over the week to 0.47%, and availability is extremely loose at 1,041%, meaning there are roughly ten shares available for every one currently borrowed. There is no squeeze dynamic here. The shorts are not paying up to stay positioned, and there is ample room for new entrants on either side. Options positioning has shifted in the same cautious-but-not-alarmed direction. The put/call ratio is 1.09, actually below its 20-day average of 1.18, a reading that is about 1.1 standard deviations lighter on defensive positioning than recent norms. The options market has become fractionally less bearish into the print, even as price action has deteriorated.

The index picture adds a mechanical dimension that is separate from the fundamental debate. ORTEX puts a 75% probability on IP being removed from both the CRSP US Large and CRSP US Mid indices at the December 2026 Quarterly Review, with the rank date on December 4. The price that decides it is $39.94. IP's current price is 19.6% below that level. If the deletion is confirmed at announcement on December 7 and executed on December 22, index trackers would need to sell approximately $224M combined across the two indices, about 1.3 days of normal volume. Separately, ORTEX assigns a 60% probability to a Russell 1000 and Russell 3000 share count reduction tied to the pending spinoff of IP's EMEA packaging business, with dates estimated around March 2027. That spinoff process, and the capital structure questions that come with it, is likely to be a focus of today's call.

On the ownership side, Capital Research and Management holds 18.6% of shares and made no change as of September 30. BlackRock added 4.7 million shares in the same period to reach 9.6%. T. Rowe Price, holding 8.7%, has trimmed from the 12.6% level it disclosed as recently as May 2025 per its last 13G/A. That directional shift from one of the larger institutional holders is worth tracking in subsequent filings. The most recent meaningful insider transaction was an executive VP sale of $1 million in August at prices around $41, well above where the stock trades now. No open-market purchases appear in the record since a director bought $313,000 worth at $31.30 in May.

The next specific thing to watch is today's earnings call and whether management addresses the pace of the DS Smith integration and containerboard demand into year-end. After that, the December 4 CRSP rank date is the next hard datapoint, with IP needing to recover above $39.94 to avoid the index removal that would bring mechanical selling pressure in the final weeks of December.