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Deutsche Bank Reports Summaries

071220 Deutsche Bank Report - Wausau Paper Lowers 4Q Earnings

Deutsche Bank - Equity Research

Wausau Paper {Ticker: WPP, Closing Price: USD 9.53, Target Price: USD 17.00, Recommendation: BUY}.

Wausau Paper announced revised 4Q guidance, lowering its EPS expectation from $0.04 to $(0.04).  The company is citing lower-than- expected results in both its Printing & Writing and Specialty segments.  Demand in those segments turned out to be significantly weaker than anticipated earlier in the quarter.

Based on the new guidance, we are reducing our 4Q estimate from $0.06 to $(0.04), which takes our '07 estimate down from $0.25 to $0.15.   We are also reducing our '08 estimate from $0.45 to $0.25. 

In response to the disappointing performance in Printing & Writing and Specialty, the company is taking some positive steps, such as closing the Groveton, NH mill; selling the roll wrap business; and investing in additional toweling capacity.  However, we wonder if these moves go far enough.  We think today's news will only heighten the pressure on Wausau to consider the dramatic restructuring that we suggested on September 14, “New Strategy, New Structure in Order?”