MAGN

Magnera ($MAGN): Executives Buying Shares Aggressively Despite Earnings Shock and Stock Plunge

05/12/2025 21:37

Magnera Corp's ($MAGN) stock price plummeted after reporting first-quarter results on May 7 that significantly missed expectations. The company recorded an adjusted loss of $1.15 per share, far below analysts' expectations of 20 cents per share earnings, while revenue came in at $824 million, short of the anticipated $842 million. This earnings shock sent shares tumbling nearly 18% in a single day on May 7, a substantial decline from mid-February when the stock had climbed to approximately $23. Currently trading around the $14 mark, the stock has accumulated a year-to-date decline of 16.5%. Notably, following this sharp price drop, Magnera insiders have made purchases. On May 9, President Curt Begle acquired 20,275 shares at an average price of $14.01, totaling $284,152. This was followed by Director Kevin Fogarty's purchase of 20,000 shares at $15.15 per share, amounting to approximately $302,948 on May 12. These insider purchases echo a similar pattern from February when President Begle bought 23,786 shares at $21.08 per share, investing $501,297 on February 11, and Director Carl Rickertsen acquired 20,000 shares at $20.33 per share, spending about $406,532 on February 27. However, these executive purchases stand in stark contrast to the massive selling by a major shareholder last year. Carlson Capital L.P. sold over 32 million shares for approximately $593 million across June 27-28, 2024, followed by an additional sale of about 4.8 million shares for $109 million in September. Notably, Carlson Capital's disclosures indicate these transactions were made through indirect ownership, with each reporting person disclaiming beneficial ownership of the securities. Examining Magnera's financial situation, this small-cap company has seen increased sales but deteriorating profitability following its recent merger with Glatfelter. Net sales for Q2 2025 increased by 48% year-over-year to $824 million, but operating income declined dramatically from $21 million to just $4 million. The company carries a substantial financial burden with total debt of $1.998 billion and a leverage ratio of 3.9x. Recognizing these challenges, Magnera has revised its annual guidance downward, projecting adjusted EBITDA in the range of $360-$380 million and post-merger adjusted free cash flow between $75-$95 million. In this context, the stock purchases by executives can be interpreted as a positive signal of confidence in the company's long-term value. The recent acquisitions by President Begle and Director Fogarty are particularly significant as they occurred after the substantial price decline. Despite current difficulties, analysts maintain an overall 'buy' rating on Magnera, with a median 12-month price target of $20, suggesting upward potential of approximately 40% from current levels. Investors should remain cautious about Magnera's short-term performance deterioration and high debt levels while also considering the ongoing insider buying signals and potential long-term value creation from the post-merger integration process. Particularly with market expectations now lowered following the recent price decline, any signs of performance improvement could provide room for stock recovery.

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