Jefferies lifts UPM-Kymmene stock target, maintains hold By Investing.com

On Friday, Jefferies updated its outlook on UPM-Kymmene OYJ (UPM:FH) (OTC: UPMKY), raising the price target marginally to EUR35.80 from EUR35.60, while reiterating a Hold rating on the stock. The firm anticipates a second-quarter EBIT of EUR235 million, a slight decrease compared to the consensus estimate of EUR254 million.

Despite this, Jefferies foresees a strong recovery for UPM in the second half of the year, predicting that the company’s EBIT for 2024 will reach approximately EUR1.59 billion, which is around 9% above the consensus.

The analyst highlighted UPM’s solid financial position, emphasizing its strong balance sheet and robust free cash flow projections for the period from 2025 to 2028, following the peak capital expenditure phase. This financial strength is expected to support future capital returns to shareholders.

The firm also pointed out that European pulp prices are currently at high levels, which suggests that UPM’s short-term performance is likely to be influenced by the prevailing sentiment in the pulp market, especially given the mixed views on China’s market.

While acknowledging the potential for a strong recovery in the latter half of the year, the analyst expressed caution over the current pulp price rally and the timing of market entry, recommending to maintain a Hold position on the stock at the new price target of EUR35.80.

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