Merrion positive on Smurfit shares

Jefferson Smurfit shares are being recommended as a buy at #2.35 for investors by Merrion Stockbrokers. In a new report on the company, the brokers suggest there is the potential for the shares to realise a value of well in excess of #3 going forward. It suggests that economic recovery and capacity reductions hold out the prospect of an improvement in share price performance for the Jefferson Smurfit group, but these alone are unlikely to remove entirely the undervaluation relative to its US and European peers.

A merger between Smurfit and Smurfit-Stone Container Corporation (SSCC) is still considered likely by the markets but Merrion believes this is not the only option under which shareholders would realise value. As an alternative it says SSCC could be sold while a share buy-back scheme would also have attractions for shareholders. Based on a high probability of an initiative along one of these lines, Merrion is recommending the shares as a buy.