Goldman Sachs began coverage of six European pulp and paper stocks on Tuesday, tilting its recommendations toward downstream packaging firms rather than upstream pulp and forestry names. The firm placed its earnings projections on average 4-6% below market consensus through 2027.
Ratings and price targets
Goldman assigned "buy" ratings to Swiss aseptic carton maker SIG Group and Irish-American containerboard operator Smurfit Westrock. The bank put a "sell" rating on Finnish forestry group Stora Enso, and issued "neutral" ratings on Mondi, UPM and SCA.
Sector backdrop
According to Goldman Sachs, the European sector has lagged the STOXX 600 by roughly 66% since 2023, as oversupply in the pulp market combined with rising Chinese competition has weighed on producers. The analysts point specifically to pulp pricing as their principal downside driver.
Goldman forecasts hardwood pulp prices in China to decline to $550 per tonne by 2027 from $595 at present, while anticipating global market utilisation to remain near 86%. The bank also expects new supply of roughly 1.8 million tonnes per year to outstrip demand growth of about 1.2 million tonnes annually through 2029.
Highest-conviction buy: SIG Group
SIG Group is Goldman's top conviction among the six, with a CHF 16 price target that implies 48% upside. The firm notes the stock now trades at a 33% discount to its 10-year average EV/EBITDA multiple following two guidance reductions, and states that its estimates have been "adequately re-based," making the valuation an attractive entry point in Goldman's view.
Constructive view on Smurfit Westrock
Smurfit Westrock was given a $49 target implying 35% upside. Goldman highlights the company's roughly 59% North American earnings exposure as a strategic advantage. The brokerage cited U.S. tariff protection, capacity rationalisation and a concentrated market structure - with three players holding 77% of U.S. paperboard capacity - as supporting factors for its constructive stance.
Most bearish: Stora Enso
Goldman's most negative call is Stora Enso, where an €8.0 target implies 16% downside. The bank's forecasts sit 12-17% below consensus on 2026-27 EBITDA, reflecting its view that Stora's new 750,000-tonne Oulu consumer board mill will ramp up at a time when Chinese export volumes are expected to redirect to Europe following the introduction of U.S. tariffs.
"With the US market largely insulated by the introduction of new tariffs, we believe a significant portion of these exports will flow to Europe, exerting additional pressure on the market," Goldman analysts said.
Goldman also notes Stora trades at 8.7x 2026/27 EV/EBITDA, a 12% premium to its historical average, which the bank describes as stretched.
Neutral-rated names
- UPM is noted to trade about 13% above its historical average and carries cost-curve exposure to softwood pulp.
- Mondi is recognised for its market-leading position in sack kraft paper but faces a slow recovery in containerboard demand.
- SCA's deep forest integration is identified as a potential near-term drag amid falling Nordic wood prices.
This coverage launch underscores Goldman's preference for downstream packaging exposure versus upstream pulp and forest-integrated names, driven by its pulp-price outlook and supply-demand dynamics through 2029.