Goodbody Stockbrokers is continuing to recommend Smurfit as a buy, with growing expectations that a takeover of Smurfit Stone could happen sooner than later at a premium to the current share price. A year ago the brokers had suggested this would happen within two to three years but it now suggests that outcome is looking increasingly likely in the shorter term. If that happens, Goodbody believes its current share price target of €2.50 looks modest with a takeover situation likely to be one where the upside share price potential is in the region of 20 to 50 per cent.
It's short-term perspective on the share price is tempered by the still weak fundamentals of the paper industry globally, which is reinforced by the fact that it is reducing its forecasts.
Nonetheless, Goodbody notes that the stock is relatively cheap at current levels and, combined with a high yield and substantial, if speculative, upside, it recommends it as a buy.
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