Santander's new report previewing the first quarter 2023 (1Q23) results for pulp and paper companies was recently released. In this context, the bank understands that weaker pulp prices may weigh on the results of companies in the sector, especially for Suzano (SUZB3).

The problem was that pulp prices in the international market fell, so the bank's expectation is that EBTIDA will fall by about 21% when compared to the immediately previous quarter. Still, Santander released the estimates of other companies to make a comparison.

"In 1Q23, average hardwood pulp prices in China fell by $100/tonne. Thus, Santander expects Suzano to present an EBITDA (earnings before interest, taxes, depreciation and amortization) of R$ 6.47 billion, down 21% in the first three months of the year compared to the fourth quarter of 2022. On the other hand, Klabin and Copec (Chile) should present more resilient results due to the lower exposure of companies to pulp," explains the specialized portal Money Times.

Thus, the recommendation for Suzano remains as "outperform" (expected performance above the market average, equivalent to "buy"), with a target price of R$ 78, a potential increase of 93.5%.  "Among Santander's other recommendations in the basic materials sector, Klabin (KLBN11) stands out, purchase, target price of R$29.00;  Gerdau (GGBR4), buy, target price of R$35.00; Usiminas (USIM5), neutral, target price of R$8.50 and Dexco (DXCO3), neutral, with a target price of R$6.00".  

Source: Agrolink