Essity (Buy, TP: SEK315.00) - Value beyond 2023e
Essity reported weak Q2 results, with organic growth and margins below our expectations. It guided for lower volumes YOY in 2023 (previously flat to up) and H2 looks set for campaign activity. We have cut our target price to SEK315 (330), but reiterate our BUY, as we still like the earnings momentum (Q2 adj. EBITA +c50% YOY). At our target price and on our estimates (2023e adj. EBITA 10% below pre-Q2 consensus), the stock would be trading at a 2023–2024e adj. P/E of c19–17x, in line with its historical median.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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