A recent decline in the price of a type of recycled paper is likely to boost earnings for packaging company Orora, analysts at Citi say.
Cit has upgraded its rating on Orora stock to "buy" and lifted its 12 month price target by 12.5 per cent to $3.60.
Orora shares gained six cents, or 1.9 per cent, to $3.22 on Wednesday.
Citi analysts said the main driver for the company's earnings will be a crash in US prices for old corrugated container - recovered paper used to making packaging boards- after China extended a ban on recovered paper imports.
Orora's earnings before interest and tax could be boosted by $11 million in the current financial year, and the company will also benefit from stable container board prices, the analysts said in a note to clients.
Orora has a strong footprint in North America, with sales revenue from the region now slightly exceeding that from Australasia.
The analysts said the improvement in the company's earnings growth will be underpinned by capacity expansion at its glass plant, increased utilisation at its B9 paper plant, incremental earnings from recent acquisitions and favourable commodity price moves.
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