Mondi and Smurfit Kappa are top buys in packaging, says Jefferies

10th Oct 2014 11:58

Higher prices and favourable exchange rates may lead to higher 2015 forecasts for European paper and packaging makers, according to broker Jefferies International. Positive container-board pricing momentum and a stronger dollar versus the euro may prompt brokers to upgrade their profit predictions during the sector's third quarter results season later this month and in November, Jefferies said.The broker said DS Smith, Mondi and Smurfit Kappa all had strong balance sheets, giving them increased financial flexibility, although the latter pair were its top picks in the sector.It highlighted Smurfit's deal last month to buy US Bates Container for €124m and said it expected more mergers and acquisitions and share buybacks across the industry next year.Jefferies expects Mondi to report positive news on industrial bags but continued volume weakness in consumer packaging.It has 'buy' recommendations on both with a 1,325p target price on Mondi and a €24.00 target on Smurfit.Shares in Mondi fell 4p to 952p at 12:43 in London, while Smurfit's stock dropped €0.53 to €16.17 and DS Smith slipped 0.4p to 244.8p.