Habib Ur Rehman
2 min read
In This Article:
Goldman Sachs (NYSE:GS) upgraded Suzano Papel & Celulose (NYSE:SUZ) from Neutral to Buy on June 13 and raised its price target to R$65 from R$63. The bank's analysts cited a favorable mix of valuation, currency tailwinds, and sector underexposure for the rating. The new target implies a 22.6% upside for the Brazilian pulp producer.
The investment bank analysts pointed to an 11% YTD depreciation in the Brazilian real as a key advantage for Suzano, which exports heavily in U.S. dollars. Combined with pulp prices nearing marginal cost levels, Goldman sees the environment tilting back in the company’s favor.
A mobile crane moving a shipment of bulk pulp & paper product.
What sealed the call, however, was valuation. Suzano (NYSE:SUZ) is now trading at a 15–17% free cash flow yield and 5.4–4.6x EV/EBITDA on 2026–2027 estimates, which is well below its 10-year EV/EBITDA average of 6.5x. For Goldman, that disconnect signals room for rerating, especially with the stock down 15% YTD and underperforming Brazil’s Bovespa index by 29%.
Goldman (NYSE:GS) acknowledged it had taken a cautious stance on Suzano since its coverage since 2021, during what it expected to be a prolonged downcycle in pulp prices. Over that period, Suzano returned just 2%, versus a 19% gain for the Bovespa. The firm now sees that thesis shifting, even as risks like rising Chinese supply remain on the table.
Goldman's view seems to have priced in Suzano’s headwinds, and what’s left is a leaner, undervalued exporter well-positioned to benefit from currency trends and a stabilizing pulp market.
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Disclosure: None.
