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On Wednesday, DS Smith Plc (SMDS:LN) (OTC: DITHF) experienced a change in stock rating as Barclays downgraded the company from Overweight to Equalweight, albeit with a slight increase in their price target to £4.35 from £4.20.
The adjustment comes as DS Smith's share price approaches the firm's target, with the company currently undergoing an acquisition by International Paper (IP).
The Barclays analyst noted that the future performance of DS Smith's stock is likely to be influenced by the stock price movements of IP, given that the current spread is a mere 3%. The analyst's commentary highlights a preference for SW, which is deemed to be more attractive than DS Smith at present valuations.
The revised price target of £4.35 reflects a roll-forward of the stock's long-term multiple, which is approximately 12 times. This adjustment is indicative of the analyst's view on the company's value over an extended period.
DS Smith, a provider of corrugated packaging, has been in the news due to its acquisition process by IP, a significant factor in the stock's current and future valuation. The correlation between DS Smith's stock and IP's performance is emphasized as a key consideration for investors following the sector.
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