Essity (Hold, TP: SEK275.00) - Balancing expectations
With falling raw materials costs, focus turns to Essity’s ability to maintain positive pricing momentum going forward. Given negative inventory value adjustments, the full effect of the falling pulp prices is unlikely to be seen in Essity’s Q3 results (due at 07:00 CET on 25 October) but we have raised our EPS forecasts by 4–8% given favourable FX and the expectation that Essity will retain pricing discipline. We find the shares in neutral territory in valuation and relative appeal, and thus have upgraded our recommendation to HOLD (SELL) and have lifted our target price to SEK275 (260).
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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