Essity (Buy, TP: SEK317.00) - Solid Q3 results expected
For Q3, we forecast sales growth of 10.5% YOY and an adj. EBITA margin of 11.1%. We expect a continued recovery from pandemic-related headwinds against easy comparables, but increased temporary headwinds from raw materials price inflation and other cost increases (e.g. energy and freight costs), which are likely to weigh on margins. We reiterate our BUY, but have lowered our target price to SEK317 (320). With the stock trading at a 2022e P/E of 16.7x, 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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