UBS initiates Suzano stock with Buy rating, sets R$73 target

Published 10/04/2025, 09:02
UBS initiates Suzano stock with Buy rating, sets R$73 target

On Thursday, UBS began coverage on Suzano Papel & Celulose (SUZB3:BZ) (NYSE: SUZ), issuing a Buy rating and setting a price target of R$73.00. The firm highlighted Suzano as a leading choice within the Latin American Paper & Pulp (P&P) sector and the broader Brazilian Materials market.

UBS cited several factors contributing to Suzano's favorable outlook, including the company's position at a low point in the industry cycle, increasing pulp industry utilization rates, and the conclusion of a capital expenditure cycle. The company maintains impressive gross profit margins of 42.19% and generated $684.5 million in levered free cash flow over the last twelve months. Additionally, UBS expects an increase in EBITDA due to the ramp-up of the company's projects, attractive free cash flow yields, and ongoing debt reduction efforts.

The research firm anticipates that Suzano will trade at a multiple of 5.3 times enterprise value to EBITDA for 2025 and generate approximately 10% free cash flow yields, which is projected to improve to -18% by 2026. UBS's analysis suggests that the market has not yet fully priced in the potential for a cyclical reversal, which could lead to significant value creation for Suzano.

While UBS acknowledges the potential risks associated with Suzano's strategy of international expansion, the firm does not foresee any short-term moves that could significantly undermine the positive thesis established for the company. InvestingPro analysis suggests the stock is currently undervalued, with additional metrics and insights available in the comprehensive Pro Research Report, part of the coverage of 1,400+ top stocks. With these considerations, UBS has positioned Suzano as a top pick in the sector with a strong Buy recommendation.

In other recent news, Suzano S.A. has received a positive outlook revision from Fitch Ratings, affirming its Long-Term Foreign Currency and Local Currency Issuer Default Ratings at 'BBB-'. This upgrade reflects Fitch's expectations for Suzano's net leverage to decrease significantly by 2026, supported by strong operating cash flow. Suzano's expansion in the U.S. paperboard market, with the acquisition of two industrial assets, has added approximately 420,000 metric tonnes to its production capacity. Fitch projects Suzano's EBITDA and cash flow from operations to reach $4.7 billion and $2.6 billion respectively in 2025, with further increases expected in 2026.

Additionally, Suzano plans to increase the prices of eucalyptus pulp in Asia, North America, and Europe starting from February, as reported by Reuters. The price hike will be $20 per metric ton in Asia and $60 per metric ton in Europe and North America. These changes will impact all buyers of Suzano's eucalyptus pulp in these regions. The company's significant forestry holdings and low-cost production structure further bolster its investment-grade credit profile, as noted by Fitch. Suzano's current cash position is robust, covering debt maturities up to the end of 2026.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.