Goldman Sachs Has a Buy Rating On Domtar (UFS)

Goldman Sachs has a Buy rating and a $93 price target on Domtar Corp. UFS. In a note sent to clients, Goldman writes, "In our coverage, Domtar (UFS) offers the greatest earnings leverage to pulp prices. Despite our near-term outlook for weaker pulp prices, Domtar shares are trading at a 21% free cash flow yield and only 3.6X our 2011E EBITDA vs. peer group average of 5.2X. Risks to our 12-month, $93 P/cash EPS and EV/EBITDA-based price target include a sharper decline in pulp prices, greater secular demand erosion in paper, and robust cost inflation." Shares of UFS lost $3.09 to close at $75.60, a loss of nearly 4%.