Craig-Hallum ups Ranpak target after ‘transformative’ Amazon deal

Craig-Hallum raised the firm’s price target on Ranpak Holdings (PACK) to $15 from $12 and keeps a Buy rating on the shares. The firm views the company’s warrant agreement with Amazon (AMZN) as “transformative.” The transaction will “significantly broaden” Ranpak’s relationship with Amazon, by geographic and product-line expansion, and will result in many positive changes, the analyst tells investors in a research note. Specifically, the amount of activity with Amazon will inflect higher and will now come from entirely high margin converting revenue, at least initially, which will be highly accretive to gross and EBITDA margins, contends Craig-Hallum. Because Ranpak isn’t procuring paper on Amazon’s behalf, working capital intensity lessens which also results in a positive change to the cash flow statement, the firm adds. Hallum believes the agreement “appears to be a highly positive validation” of Ranpak’s position in the market, which could lead to “outsized share gains” across other customers.