UPDATE: Credit Suisse Upgrades Mercer International (MERC) to Outperform
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Credit Suisse analyst Andrew Kuske upgraded Mercer International (NASDAQ: MERC) from Neutral to Outperform with a price target of $19.00 (from $18.50).
The analyst comments "We believe Mercer International Inc. (MERC) faces many positives that range from commodity prices (pulp, lumber and power), generally favourable FX rates (EUR/USD and USD/CAD) along with a rather attractive valuation. In this context, even with more moderate (in our view) future embedded forecasts around commodity prices and FX, among other factors, we upgrade MERC to Outperform from the prior Neutral rating. In addition, our target price increased to US$19 from the prior US$18.50. On a nearterm basis, there are clearly some concerns on the impact of a fire at the Stendal Pulp Mill and, as with many others in the market, the impact of a potential economic recession. Pulp exposed stocks typically possess a significant amount of operating leverage that is subject to a considerable amount of commodity price volatility. These factors combined with limited trading liquidity can often exaggerate the stock’s performance. To us, the recent downward movement in MERC’s stock provides an interesting opportunity for potential performance."
Shares of Mercer International closed at $12.39 yesterday.
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