Sylvamo Stock Is Affordable In Positive Paper Pricing Environment, BofA Says

Sylvamo Corporation’s SLVM stock is trading at an attractive valuation at a time when uncoated free sheet (UCFS) prices are rising, according to BofA Securities.

The Sylvamo Analyst: George Staphos initiated coverage of Sylvamo with a Buy rating and $38 price target. 

The Sylvamo Takeaways: The company’s Latin American business is “particularly strong” and Sylvamo is one of the two largest producers in the region, Staphos said in the initiation note.

“Additionally, SLVM is a comparatively low-cost producer of UCFS and has an off-take agreement with IP for tons coming from that company’s Georgetown and Riverdale mills,” the analyst said.

These factors should “insulate it somewhat from declining UCFS demand in North America and allow SLVM to run more fully than peers,” he said.

“At some point, this demand decline will once again lead to lower UCFS pricing, though we don’t expect this until 2022 or 2023.”

SLVM Price Action: Shares of Sylvamo were trading 5.04% higher at $26.05 late in Thursday's session.