Davy Research upbeat about pricing momentum at Mondi

14th May 2014 11:24

Davy Research said it sees upside risk at Mondi, keeping an 'outperform' rating on the packaging stock as the momentum in selling prices turns positive."While the statement from Mondi is broadly in line with expectations, there is a sense that positive pricing momentum is being restored,"said Analyst Barry Dixon and team.Mondi said that operating profits in the first quarter were up 13% year-on-year at €183m.While overall volumes for the group were flat, Davy highlighted an upward pressure on pricing in the company's Packaging Paper division, along with a "stable/improving" demand environment."Overall, while we are unlikely to change forecasts, if this positive momentum is sustained, the risk to forecasts is to the upside. Combined with positive long-term fundamentals for most of Mondi's business units, this means that we maintain our 'outperform' rating." Mondi was trading 2.9% higher at 1,061p by 11:37 on Wednesday.BC