Lenzing raised to BUY, TP EUR 83 - Fibre market in recovery mode, new opportunities in focus
We raise our recommendation for Lenzing to BUY from HOLD and increase our target price to EUR83 (EUR 66). Fibre markets have rebounded from their lows in August and demand, at least from Asia, is back, reducing inventories and increasing economics. While restrictions from a second wave of the pandemic in Western economies might still cause some short-term volatility, we believe that we are past the bottom on short-term drivers such as viscose prices. Lenzing is well supported by mid-term drivers, such as new, margin-supportive lyocell and dissolved-wood-pulp (DWP) capacities as of 2022e, strong non-wovens demand that might get an extra kick from regulations against single-use plastics (e.g. EU regulation to label single-use sanitary items as of mid-2021) and its sustainable footprint. With our view and confidence shifting more towards 2021-22e, we increase our target price to EUR83 (EUR 66).Lenzing is engaged in supplying the global textile and nonwovens industries with man-made cellulose fibers and is a supplier in many business-to-business markets. The portfolio ranges from dissolving pulp, standard and specialty cellulose fibers to high-quality plastic polymer products and engineering services. Co.'s operations are divided into three segments: Fibers, which produces and markets man-made cellulose fibers for the textile and nonwovens industry; Plastics, which produces weaving, labelling films, laminates and woven fabrics; Engineering, which implement projects, supply plant and equipment and provide services arond the world.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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