DAVY VIEW

The announcement by DS Smith earlier this week that it now expects H123 operating profit of “at least £400m” justifies an upgrade to our forecasts. The primary driver of the outperformance has been the continuation of strong pricing momentum and effective cost mitigation. We now anticipate the group delivering £767m of operating profit in FY23 and £777m in FY24. Based on revised numbers, the stock is now trading at 4.8x EV/EBITDA, a 36% discount to its ten-year average.