GCISmurfit Westrock 'top pick' in sector, says JPMorgan
JPMorgan Cazenove initiated coverage of Smurfit Westrock on Friday with an 'overweight' rating and $66 price target, adding the stock to its 'Analyst Focus List'.
"In our view, the cycle is at the early stages of a recovery with current prices still below through the cycle levels (especially once marginal producer margins are considered)," JPM said.
The bank also said it sees significant scope to improve the business - beyond announced synergies - through integration and targeted mill improvement.
"Despite this, Smurfit WestRock is trading at a significant, unwarranted discount to US peers and we would expect this valuation gap to close once high return on invested capital investments are concluded/better understood," it said.
JPM said its discounted cash flow-backed valuation suggests around 45% upside, which is the highest in its sector, and therefore it flagged Smurfit WestRock as its "top pick" in the sector.
Corrugated and paper-based packaging firm Smurfit Westrock was recently formed through the merger of Dublin-based Smurfit Kappa and Atlanta-based Westrock.
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