Palantir a high-risk investment with ’a one-of-a-kind growth and margin model’
Investing.com -- UBS Global Research has initiated coverage on Finnish packaging company Huhtamaki Oyj (HE:HUH1V) with a “buy” rating and a 12-month price target of €40, implying around 30% upside from the €30.96 closing price on June 24.
The analysts cite Huhtamaki’s exposure to sustainable packaging trends, internal efficiency improvements, and balance sheet strength as key drivers.
Huhtamaki specializes in fiber, paperboard, and flexible packaging, supplying major clients in foodservice, retail, and consumer goods.
The company’s product line includes recyclable and compostable formats under the blueloop platform, aimed at helping customers meet evolving environmental regulations.
According to UBS, Huhtamaki’s end markets are expected to grow at a 4.6% compound annual rate between 2025 and 2029.
UBS projects Huhtamaki’s revenues will rise from €4.16 billion in 2025 to €4.9 billion by 2029, while diluted EPS is forecast to increase from €2.55 to €3.27 over the same period.
Huhtamaki’s profitability is also improving. The company’s adjusted EBIT margin rose from 8.8% in 2022 to 10.1% in 2024.
UBS expects this to stabilize above 10% from 2026 onward, reaching 10.3% by 2027. Return on invested capital is projected to exceed 12.5% by 2029, up from 12.1% in 2024.
UBS attributes this to easing cost inflation, pass-through pricing, and a €100 million cost savings program, €87 million of which was already achieved by early 2025.
Free cash flow is expected to range from €240 million to €300 million annually between 2026 and 2030, supporting potential M&A, special dividends, or share buybacks.
Net debt is projected to fall from €1.19 billion in 2025 to €880 million by 2029. Net debt to EBITDA is forecast to improve to 1.5x in 2026, from 1.9x in 2025.
Valuation is supported by a blended discounted cash flow and peer comparison approach.
The €40 target implies an EV/EBITDA multiple of 8.6x, up from 8.2x currently. UBS’s reverse DCF suggests the market is undervaluing Huhtamaki, with current pricing implying EBIT of €340 million in 2026, about 25% below the UBS estimate of €445 million.
The report identifies structural support from tightening regulations, such as the EU’s PPWR and potential U.S. “Farewell to Foam” legislation, as catalysts for growth in Huhtamaki’s recyclable product lines.
Consumer willingness to pay a premium for sustainable packaging, as shown in UBS Evidence Lab surveys, further underpins demand.