Shares in Irish packaging group Smurfit Kappa will rebound in 2012 if the company successfully refinances a chunk of debt in the new year, Davy stockbrokers has predicted.
Shares in Europe's largest market of cardboard boxes have been hammered in recent months as the debt crisis in Europe continued to unfold.
But Davy reckons the underperformance of Smurfit Kappa's stock relative to its peers is unwarranted, even given the cut in profit forecasts. Shares in the company are down about 42pc in the year to date and have fallen 55pc since June.
"The market still seems to have doubts about the company's ability to refinance the debt maturing in 2013 and 2014," noted Davy analyst Barry Dixon.
"The bond market has no such concerns, with Smurfit Kappa's bonds recovering strongly from the weakness in June and now trading at close to par," he added.
Mr Dixon said he thinks it's possible the company can refinance the maturing debt at a "manageable incremental cost" given the low inter-bank rates and the company's gross cash balances. Mr Dixon has an 'outperform' rating on the stock with an €8 price target.