Barclays starts coverage of Stora Enso, SCA at 'underweight'

SIG AG

07/03/2024 15:03

** Barclays initiates coverage of Finland's Stora Enso
 STERV.HE  and Sweden's Svenska Cellulosa  SCAb.ST  with
"underweight" ratings
    ** It points out Stora Enso is doing a little bit of
everything (wood products, pulp, packaging board, packaging
solutions), which can lead to heightened cyclicality
    ** "We think it is difficult to have all the businesses
performing and growing in any one given year," the broker says,
adding that the company's path towards reducing cyclicality is a
multi-year project
    ** Barclays also notes Stora Enso's low operational
efficiency and high leverage, flagging that investors might
favour companies with more forestry-focused business, like SCA
    ** Still, it keeps a bearish stance on the Swedish group,
pointing to its enterprise value (EV) being highly dependent on
forest valuation
        ** The broker finds this risky, given potential forest
value declines in Sweden
    ** It sees SCA stock's valuation as demanding and current
trading multiple as expensive
    ** Barclays' note on forestry, paper & packaging sector also
covers Swiss SIG  SIGNC.S  -- the broker ups its rating to
"equal weight" from "underweight," seeing the stock as fairly
valued

 (Reporting by Elviira Luoma)
 ((Elviira.luoma@thomsonreuters.com))