IN THE KNOW: Jefferies affirms Mondi for now; Panmure Liberum upbeat

Jefferies on Thursday maintained its share price target for Mondi PLC, despite disappointing third-quarter performance.

The New York-based broker kept price target at 1,080.00 pence, with a 'buy' recommendation. Late last month, it cut its price target from 1,085p and left its 'buy' rating unchanged.

Shares in Mondi ended down 7.9% to 753.00 pence each in London on Thursday, and fell 9.1% to ZAR163.29 in Johannesburg.

Mondi's third-quarter earnings before interest, tax, depreciation and amortisation was 4% below its estimate and was lower than the buy-side range of between EUR200 million and EUR210 million, Jefferies analyst Cole Hathorn said.

The Weybridge, England-based packaging company reported on Thursday that its underlying Ebitda was EUR196 million in the three months that ended September 30, up 17% from EUR167 million a year before.

This underlying Ebitda, a key measure of underlying profitability, included nil forestry fair value gain.

Mondi noted pricing was offset by Central and Eastern Europe wood costs, and higher-than-expected energy input cost inflation in the third quarter, Hathorn said.

Into the fourth quarter, Mondi will benefit from further packaging prices increases achieved, partially offset by ongoing cost inflation, Jefferies' analyst said, adding that forest fair value gain is now expected to be nil in the last three months.

Panmure Liberum remained positive despite Mondi's poor third-quarter performance.

"We continue to see strong prospects, due to 'paperisation' and notably in flexible packaging, as e-commerce and FMCG demand continues to increase," Panmure Liberum analyst Joe Brent said.

The investment bank do not think the market attributes sufficient attention to Mondi's flexible packaging unit. It sees Mondi as well invested and operationally geared to recovery.

Panmure Liberum's share price target for Mondi is 1,103p, with a 'buy' rating.

But Davy Research holds Mondi's recommendation at 'neutral' and share price target at 850p.

Mondi reported weaker-than-expected adjusted Ebitda for the third quarter, driven by higher energy cost inflation, coming in 6.2% lower than consensus Visible Alpha consensus, Davy analyst Ciaran Mulqueen said.

Mulqueen acknowledged that the flexible packaging division delivered a "more robust" set of results, supported by resilient order books and pricing actions.

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