Structural growth in the online shopping industry remains a key driver of stock re-ratings
Thursday 11 Oct 2018 Author: Steven Frazer

Analysts have launched a robust defence of the European packaging suppliers after a steep decline in the three key London-quoted stocks. Analysts at stockbroker Davy called the sector sell-off ‘way overdone.’

DS Smith (SMDS), Smurfit Kappa (SKG) and Mondi (MNDI), the largest of the three London-listed packagers, have all posted double-digit share price declines since the summer. Reported weakening prices for containerboard is widely seen as the cause.

Containerboard is the corrugated cardboard wrapping used by Amazon and thousands of other online retailers to protect packages sent out to customers.

But Davy’s own channel checks suggest that any pricing dips have been short-term and, as we head towards the vital Christmas sales bonanza, are likely to reverse.

‘If anything, the sector should have re-rated to reflect the improvement in longer-term growth dynamics driven by these structural factors [online shopping] as well as the positive earnings momentum that is likely to continue well into 2019,’ says Davy’s Barry Dixon and Flor O’Donoghue. (SF)

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