In a report released on November 10, George Staphos from Bank of America Securities reiterated a Buy rating on Sylvamo Corp (SLVM – Research Report), with a price target of $50.00.
George Staphos has given his Buy rating to Sylvamo Corp due to a combination of factors. Firstly, he sees potential EBITDA drivers, with estimates moving from $5.90 in 2023 and $4.38 in 2024 to $6.20 and $4.65 respectively. The price objective also moves to $50. Staphos maintains the Buy rating given Sylvamo’s 9.8x P/E on depressed 2024 estimates, value return and small-cap status, which he believes could favor the company should economic sentiment improve.
In addition, Staphos notes key points that support his rating: Sylvamo believes that destocking is over as its order entry has improved in 4Q. Even with the company’s anticipated downtime into 4Q to eliminate inventories, this is incorporated into its guidance of ~$100mn EBITDA for the quarter. The company did not guide for 2024 yet, and that’s expected. Despite foreseeing a very weak $479mn in annual EBITDA, Staphos points out that a pickup in volume and production could add $300/ton+. Lastly, Project Horizon is projected to add $10-15mn to EBITDA in 2024 with another $45-50mn in 2025. These factors combined lead to Staphos’ Buy rating.
SLVM’s price has also changed moderately for the past six months – from $42.220 to $47.270, which is a 11.96% increase.
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Sylvamo Corp (SLVM) Company Description:
Sylvamo Corp is engaged in producing various uncoated freesheet for paper products such as cutsize and offset paper, as well as market pulp, aseptic and liquid packaging board and coated unbleached kraft papers. The company offers Copy and Printer papers, Commercial Printing papers, Converting papers and Specialty papers.
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