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Numis upgrades DS Smith to ‘add’ as packaging group accelerates earnings momentum

In a note to clients, analysts at Numis said the proposed acquisition of Spanish Europac for an enterprise value of €1.9bn will strengthen Iberian and French market presence

packaging boxes on conveyor belt
The analysts said final results for the year to 30 April 2018 were in line with expectations

City broker Numis has upgraded packaging group DS Smith PLC (LON:SMDS)  to ‘add’ from ‘hold’ and increased its price target to 585p from 530p, saying that the company is accelerating earnings momentum.

In a note to clients, analysts at Numis said the proposed acquisition of Spanish Europac for an enterprise value of €1.9bn will strengthen Iberian and French market presence and offers scope for operational, product and supply chain improvements and annual synergies of €50m.

READ: DS Smith confirms launch of £1bn cash call to part fund acquisition of Spanish rival Europac

The analysts said final results for the year to 30 April 2018 were in line with expectations, which were at the upper end of consensus expectations for EBITA and adjusted earnings per share (EPS).

“Year-to-date the shares have performed broadly in line with the market, and most recently the share price has been close to our previous target,” the analyst said.

They added: “However, our forecasts now reflect the assumed completion of the Europac acquisition in November and our revised target price seeks to reflect the impact on the equity value.”

In morning trading, DS Smith’s shares fell 1% to 517.20p.

 

Quick facts: DS Smith plc

Price: 349.4 GBX

LSE:SMDS
Market: LSE
Market Cap: £4.79 billion
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