Essity (Buy, TP: SEK320.00) - Set for solid Q4 results
We forecast solid Q4 sales growth of 8.4% YOY and an adj. EBITA margin of 10.7%. However, our expectations and consensus have come down on stronger pandemic-related headwinds in the latter part of Q4, as well as continued and intensifying raw-material price inflation and other cost rises (e.g. energy and freight). We reiterate our BUY, but have lowered our target price to SEK320 (325). With the stock trading at a 2022e P/E of 16.0x, we believe improved financial performance should provide material scope for higher multiples.
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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