UPM (Buy, TP: EUR40.00) - In pole position for 2025
Reflecting slightly softer pulp price assumptions and a somewhat postponed expected market recovery across UPM’s industries, we have reduced our 2024–2025e adj. EBIT by 5–17%. Despite this, our forecasts still translate into attractive earnings multiples, and we expect 2025 EBIT to be up c60% YOY. Based on reduced 2025–2027e capex, we also estimate strong FCF, leaving the balance sheet overcapitalised and paving the way for buybacks on top of compelling dividends. We reiterate our BUY, but have reduced our target price to EUR40 (42).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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