Essity (Sell, TP: SEK260.00) - Challenges to margin expansion
Essity’s Q2 was broadly in line with expectations and with the company signalling difficulty in realising further price increases, the catalyst for profit margin expansion clearly loses some of its traction, even as raw material cost headwinds are easing as expected. We have made minor changes to our forecasts and still find the shares in neutral to negative territory from a valuation and performance perspective. We reiterate our SELL recommendation and SEK260 target price.
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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