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Investing.com -- Jefferies has downgraded Huhtamaki Oyj (HE:HUH1V) to “hold” from “buy,” citing continued uncertainty in volume recovery and weakness in key segments, despite what it described as a reasonable valuation in a note dated Monday.
The brokerage reduced its price target on the stock to €35 from €40, indicating limited near-term upside from the current share price of €32.08.
The brokerage pointed to a lack of clear catalysts for a re-rating and flagged risks to earnings, particularly in 2025, due to continued weakness in consumer spending and muted data from U.S. retail channels.
“HUH1V ultimately needs to see volume recovery for operating leverage benefits to be visible in earnings & shares to perform,” analyst said. “With foodservice & consumer spending uncertainty in 1H25 & FX cuts, we see recovery being pushed out again.”
Jefferies cut its 2025 EBIT forecast by 4% to €405 million, which is 4% below the €422 million consensus.
The brokerage also trimmed its 2026 EBIT estimate by 3% to €427 million. Jefferies’ estimates assume a more cautious view on North America, Huhtamaki’s most profitable region, and on its higher-margin retail tableware business.
Retail scanner data from Nielsen showed weak performance for Huhtamaki’s Chinet brand in the second quarter, following a particularly soft first quarter.
The average four-week sales for Chinet in the early part of the year remained below pre-holiday levels, and no significant restocking by major U.S. retailers has yet been observed.
The North America division, which delivered nearly half of group EBIT in 2024, is projected to see its contribution decline in 2025.
Jefferies expects EBIT from the region to drop by 12% to €179 million with a margin of 12.6%, down from 13.9% the previous year. The outlook reflects sluggish trends in both retail tableware and foodservice.
Huhtamaki’s earnings profile has been supported by a €100 million efficiency program that included plant optimization and workforce reductions.
However, Jefferies noted that while the structure is now leaner, operating leverage remains dependent on volume recovery, which continues to face delays.
Despite offering around 6% EPS compound annual growth through 2027, the analysts said Huhtamaki lacks near-term momentum.
“We would consider in futures revisiting the investment case when earnings better reflect our expectations or if we get more conviction in 2H25-2026 demand recovery,” Jefferies said.
Jefferies noted that the low valuation already reflects some downside risk, but added that without a volume rebound or upward earnings revisions, the shares are unlikely to outperform.