Essity falls after UBS double downgrade on growth, margin concerns
BUZZ-Essity falls after UBS double downgrade on growth, margin concerns ** UBS downgrades Swedish hygiene company Essity ESSITYa.ST by two notches to "sell" from "buy", saying weaker growth, margin pressure and Consumer Tissue uncertainty are likely to weigh on outlook
** The brokerage expects organic sales growth to undershoot H2 and 2027 consensus, staying below medium-term target of above 3%
** The broker warns that "margin recovery is likely to remain muted as earlier cost inflation is not fully recouped," highlighting higher input costs outpacing pricing
** "EBITA faces pressure from rising raw material costs, with consensus underestimating both inflation headwinds and limited pricing recovery," UBS says
** While management favours divesting the Consumer Tissue division, UBS says this would be complex and generates a potential overhang for the group's share price
** UBS adds a sale of Consumer Tissue would not address structural challenges elsewhere in Essity's portfolio
** Eight out of 16 analysts covering Essity rate it "strong buy"/"buy", four "hold", four "sell" - LSEG data
(Reporting by Vera Dvorakova)