UPM (Buy, TP: EUR28.00) - Label us bullish
UPM reported a high-quality earnings beat in Q2, despite the headwind caused by collapsing paper demand. Raflatac and Specialty papers stole the show, as both again enjoyed strong performance. The challenges in paper markets are evident, and guidance for lower H2 prices came as no surprise but should reset consensus EBIT for 2020e to a lower level. We see the outlook as somewhat de-risked, and believe recent underperformance offers a nice entry point to the long-term story. Consequently, we have upgraded to BUY with a EUR28 (26) target price.UPM-Kymmene is a global paper and forest products group, mainly engaged in the production of paper, with an emphasis on the manufacture and sale of printing and writing papers. Co.'s operations comprise of these segments: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper ENA, UPM Plywood and Other. UPM Biocomposites, UPM Biochemicals business units and Group services are reported in Other operations. Co.'s activities are centred in European Union countries, North and South America and Asia with production plants in 13 countries.
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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