Packaging Corporation of America's (PKG) acquisition of Greif's (GEF, GEF.B) containerboard business provides the packaging products manufacturer with more scale and capacity, boosting growth prospects over the coming years, Truist said in a Wednesday research report.

The acquisition also enables the company to avoid higher capital expenditures to expand its legacy mills for increased volume growth, which could result in a decline in capex by $100 million to $200 million in 2026 compared with $855 million this year, the firm said.

Truist expects the company to capture at least half of its $60 million synergy target next year from mill productivity, grade optimization, transportation, and integration, with potential upside given the company's execution track record.

The deal could be more than 8% accretive to the company's 2026 earnings and over 15% accretive in 2027 when incremental EBITDA contributions are included, the analysts wrote. They added that consensus forecasts for 2026 and 2027 don't yet appear to reflect the acquisition.

Robust cash flow from legacy assets and the Greif acquisition, along with lower capex, positions the company to increase its dividend in the next few quarters, with Truist noting the company's history of sizable raises.

The brokerage said it now expects 2025 EPS of $10.21 from $10.17 earlier and 2026 EPS of $11.50 from $10.85 previously. For 2027, it expects EPS of $12.45 from $11.60 earlier.

Truist reiterated its buy rating on the stock and raised its price target to $262 per share from $238.

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