Packaging Corp. of America (PKG) posted upbeat Q2 earnings, though cost pressures remain elevated, driven by higher energy and freight expenses linked to Middle East disruptions, UBS Securities said Thursday in a report.

UBS said PKG is realizing containerboard price boosts more quickly than peers and expects the company to fully capture the two $50-per-ton increases by the end of 2026.

The containerboard operations acquired from Greif (GEF) last year outperformed management's expectations in Q2 for the first time since the deal, and their contribution is expected to ease in Q3 due to a planned maintenance outage at a Virginia mill, the report said.

UBS cut its Q3 EPS estimate to $2.92 from $3.01. It lowered its price target on PKG stock to $271 from $272 and maintained its buy rating.

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