UBS highlights further M&A opportunities for DS Smith

8th Dec 2014 11:09

UBS has lifted its target price for packaging group DS Smith from 340p to 355p and reiterated a 'buy' rating after the company's strong first-half results, saying it sees the potential for more deals in the future."DS Smith delivered an impressive performance during H1 with robust volume growth being delivered alongside further M&A activity and deleveraging," the bank said.It said that all key metrics showed improvements, such as corrugated card volumes, margins, return on average capital employed and cash generation.DS Smith has either completed or announced the disposal of two businesses and the acquisition of four business over the past six months, but UBS believes that there are still more opportunities for the company."We believe the fragmented nature of the European corrugated industry, with the top five players accounting for only circa 40% of the market, offers opportunities for further consolidation and the deleveraging being delivered by DS Smith gives it the capacity to make additional acquisitions," the bank said."Inclusive of the £35m spend on Andopack, we continue to believe DS Smith can spend circa £600m on acquisitions."The stock was up 1% at 314.76p by 11:01, and has now risen by 9% since its first-half results last Thursday.