Packaging Corporation of America (PKG) is positioned to benefit from improving pricing power supported by tighter industry supply and strengthening demand trends, UBS said in a research note emailed Wednesday, citing expectations that a $50 per ton June price increase will hold.

The analyst said recent data points, including stronger bookings and improved industry commentary, suggest conditions are turning more favorable despite still-muted shipment volumes and operating rates below levels typically required for sustained price increases.

UBS also pointed to rising input costs such as old corrugated container and diesel, noting that higher cost pressures alongside prior capacity cuts are reinforcing the pricing environment and supporting potential margin recovery.

The firm added that additional upside could come from operational efficiencies and synergy benefits, though they cautioned that input cost inflation remains a risk in a prolonged geopolitical disruption scenario.

UBS upgraded its rating on the stock to buy from neutral and raised its price target to $248 from $232.

Shares of Packaging Corporation of America were up 3.7% in Wednesday trading.

Price: 211.30, Change: +8.13, Percent Change: +4.00