Mondi Shares Downgraded to Underweight On Overly Optimistic Expectations

Mondi shares (LON:MNDI) have come under renewed pressure following a downgrade from Barclays, signaling growing concerns about the packaging and paper company's near-term prospects. The downgrade reflects a belief that consensus expectations for Mondi are too high, with potential risks to the company's dividend payouts.

The downgrade to “Underweight” from “Equal Weight,” with a reduced price target of 760 GBp from 900 GBp, underscores the increasing skepticism surrounding Mondi's ability to meet market expectations. Year-to-date, Mondi's stock has declined by approximately 30.2%, reflecting a series of challenges that have dampened investor sentiment. 

Adding to the negative sentiment, JPMorgan downgraded Mondi to “Neutral” in October, lowering the price target to 1,180 GBp. This decision was driven by a flattened containerboard cost curve, attributed to lower recycled segment costs, unfavorable currency movements, and elevated near-term capital expenditures, all of which were seen limiting Mondi's potential upside.

Further compounding the challenges, S&P Global Ratings downgraded Mondi's credit rating from ‘A-‘ to ‘BBB+' with a stable outlook in August 2025. The downgrade stemmed from a significant decline in EBITDA and increased debt issuances since 2023. S&P estimated Mondi's adjusted EBITDA for the twelve months to June 2025 at €1 billion, a substantial drop from €1.9 billion in 2023. This decline was attributed to lower selling prices resulting from excess containerboard capacity, reduced demand from industrial and consumer end-users, and waning demand for uncoated fine paper.

Citigroup also lowered its price target for Mondi in October, reducing it from 1,530 GBp to 1,250 GBp, while maintaining a “Buy” rating. Following this adjustment, Mondi's share price hit a new 52-week low, trading as low as 837.20 GBp.

The confluence of analyst downgrades, a credit rating reduction, and lowered price targets has created a bearish atmosphere surrounding Mondi's shares. The concerns center on the company's aggressive capital expenditure plans, the challenging market conditions, and the resulting impact on its financial performance.