Stora Enso (Hold, TP: EUR12.40) - Soft outlook, patience required
A disappointing near-term outlook was our main takeaway from Stora Enso’s Q4 results, prompting us to make significant cuts to our 2020 forecasts. We believe Stora Enso is well placed to turn the earnings trend in H2 as commodity headwinds dissipate and cost actions bed in. 2020 is set to be a tough year and the stock looks to be discounting a fairly strong recovery in 2021. We reiterate our HOLD but have lowered our target price to EUR12.4 (12.8).Stora Enso is a provider of renewable solutions in packaging, biomaterials, wooden constructions and paper on global markets. Co.'s reporting segments are: Consumer Board, which develops and provides consumer packaging boards for printing and packaging applications; Packaging Solutions, which develops fibre-based packaging; Biomaterials, which provides a variety of pulp grades for paper, board, tissue, textile and hygiene product producers; Wood Products, which provides wood-based solutions for building and housing; Paper, which provides paper solutions for print media and office use; as well as Other, which includes Co.'s shareholding in the energy company, Pohjolan Voima.
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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