SCA B: Neutral Ratings Will Keep Near-Term Upside Limited

Svenska Cellulosa Aktiebolaget's analyst price target has edged lower by approximately SEK 1.50 per share, as analysts factor in slightly weaker revenue growth expectations while still viewing the shares as fairly valued within a broadly neutral rating framework.

Analyst Commentary

Recent Street research updates reflect a cautious stance toward Svenska Cellulosa, with several price target trims signaling more subdued expectations for medium term growth and profitability. While ratings largely cluster around neutral territory, the direction of estimate revisions points to limited near term upside for the shares.

Multiple bearish analysts have reduced their price targets in recent weeks, citing more conservative assumptions on revenue growth and margin progression. These adjustments, even when modest in absolute terms, highlight concerns that current valuation already discounts a best case normalization in demand and input costs.

At the same time, one major international bank has shifted its view to a more balanced position and has upgraded the stock to a neutral, Equal Weight stance rather than outright negative. This move underscores a view that, although downside risk has moderated, the risk reward profile remains finely balanced with little room for execution missteps.

Across the coverage, the prevailing message is that investors may want to temper expectations for multiple expansion until there is clearer evidence of sustained volume growth, pricing power, and disciplined capital allocation.

Bearish Takeaways

• Bearish analysts have repeatedly trimmed price targets in small increments, signaling a pattern of downward revision that points to persistent uncertainty around revenue growth and earnings leverage.
• The clustering of ratings around Neutral or Equal Weight suggests that many see the stock as fully valued, with limited upside unless the company can outperform current consensus on volume, pricing, or cost savings.
• Lowered price targets reflect concerns that execution risks in a softer demand environment could cap margin improvement and restrict the company’s ability to generate attractive returns on new investments.
• By keeping ratings neutral while cutting targets, bearish analysts are effectively warning that valuation already builds in optimistic recovery assumptions, leaving the shares vulnerable if growth or profitability disappoints.

Valuation Changes

• The fair value estimate has edged lower from about SEK 106.3 to SEK 104.8 per share, indicating a modest downward adjustment in intrinsic value assumptions.
• The discount rate has declined slightly from approximately 6.87 percent to 6.69 percent, reflecting a marginally lower implied cost of capital.
• Revenue growth has been revised down meaningfully, with the long term growth assumption moving from around minus 0.67 percent to minus 1.77 percent, pointing to a weaker top line outlook.
• The net profit margin has nudged higher from roughly 20.45 percent to 20.49 percent, signaling a very small improvement in expected profitability.
• The future P/E multiple has risen modestly from about 19.8x to 20.4x, suggesting a slightly higher valuation being applied to forward earnings.