Ence is one of the companies most linked to the cycle of raw materials throughout the Spanish Stock Exchange. In your specific case, having a large part of your business linked to paper manufacturing, the prices of the raw material you use, cellulose pulp, are key to be able to raise, or not, its margins and benefits.
In recent months the company has suffered, therefore, in an environment of price in fall. This weakness was due to a lower global demand, to an excess of supply in the supply chain and the entry into the market of new capabilities. Once this situation has already been normalized in part, Pulp prices have begun to overcomeas explained by Sabadell’s analysts.
“We see good prospects in the cellulose market, which will grow 2.3% annually until 2028 before the strength of demand and the absence of entry of new relevant capacity until that year, which we expect a favorable cycle for prices after having fallen 40% from July maximums, “they point out from the Catalan entity.
The price of Ence titles correlates a lot with the forecasts in this cellulose market, in recent weeks. Proof of this is that since the minimum of December (when the cellulose pulp in Europe also touched soil), The company bounces almost 30%until approaching the area of 3.5 euros.
This Ence Thursday will present its results of the year 2024 in full. “We do not expect surprises regarding what is commented in the third quarter, being a loose end of the year,” they point out in Sabadell. The consensus estimates an ebitda of 167 millionalmost double that of 2023, which did not reach 90 million.
Purchase recommendation
In any case, from the entity they continue to recommend buying their titles, as well as 83% of the investment firms that follow it. Only one, Bestinver, suggests maintaining that Santander’s is the only analysts who believes that positions must be undone.
“We positively highlight the recent changes in the shareholders with the increase in participation of Víctor Urrutia up to 10% and the entry of the US GP GLOGAL Holding Fund,” they point out in Sabadell. “The great catalyst is the increase in cellulose prices as well as the favorable evolution of the investment plan,” they continue. They also calculate that each variation of 2.5% in the sale price of cellulose accounts for a variation of 12% in the price per share, “they conclude.
In recent weeks there have also been other analysis houses that have increased their valuations. On average, these are now located at 4.2 euros, which leaves you a bullish potential of just over 21% from its current levels for the next 12 months.
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