Anika Begay
JPMorgan on Tuesday made a price target change to UPM-Kymmene OYJ shares, which trade on the Helsinki Stock Exchange as UPM:FH and over-the-counter as UPMKY. The new price target is set at €37.50, a slight decrease from the previous €38.00. Despite the change, the firm maintains its Overweight rating on the stock.
The adjustment comes amid concerns about the near-term impact of weak pulp prices on the company’s share price. However, JPMorgan highlighted UPM-Kymmene’s strong free cash flow outlook, which should benefit from contributions from the Paso de los Toros project.
The analyst noted that capital expenditure for this project has been accounted for in the balance sheet, suggesting a period of significant debt reduction ahead.
The financial institution expects UPM-Kymmene’s net debt/EBITDA ratio to fall below 1.0x by 2026. This expected improvement in leverage is seen as a positive development for the company, potentially allowing for the return of excess capital to shareholders or the implementation of share buybacks.
JPMorgan’s statement also suggests that the completion of the Paso de los Toros project positions UPM-Kymmene favorably for the future. With the expectation of an improving pulp price outlook, the company believes there will be a solid foundation to support the share price going forward.
In other recent news, UPM-Kymmene OYJ has been the subject of ratings revisions by two major financial firms. UBS has upgraded the company to Buy from Neutral, while simultaneously lowering its price target to €34.00 from €35.00.
This shift reflects a more optimistic outlook despite the current challenges in the pulp market. UBS cites significant progress on UPM’s key growth project and expects a significant increase in cash flow as capital expenditures decline and production volumes increase.
At the same time, Jefferies revised its stock price target for UPM-Kymmene OYJ, increasing it slightly from EUR35.60 to EUR35.80, while maintaining a Hold rating. Despite an expected modest decline in second-quarter EBIT, Jefferies expects the company to recover strongly in the second half of the year.
The company highlights UPM’s strong financial position, with promising free cash flow projections from 2025 to 2028, suggesting that this strength will support future returns on capital for shareholders.
Both companies acknowledge the current high prices of European pulp, which indicate a potential impact on UPM’s short-term performance. These are the recent developments regarding UPM-Kymmene OYJ.
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