Raymond James raises its rating on Mercer International MERC to Outperform from Perform and reiterates its price target of $8 per share to reflect valuation.
Raymond James writes, "At Friday's closing price of $6.35 Mercer is trading at a near trough 4.7x 2012E
EV/EBITDA and is discounting 2012 average NBSK pulp prices in the US$825/mt range, by our estimates. Therefore, while we acknowledge the possibility of a further US$20-30/mt NBSK pulp price reduction in Jan-11 (bringing prices to US$870-860/mt) we believe this is more than priced in."
MERC closed at $6.49 per share on Friday.
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