Mondi Shares Downgraded to Underweight As Price Target Slashed

Mondi shares (LON:MNDI) are trading 3.01% lower this morning at 890.20p, with the latest downgrade bringing with a 20% cut in price target.

The company, a global leader in packaging and paper, has faced the turn of analyst downgrades, culminating in an shift to “Underweight” rating.

Morgan Stanley are the latest to cut today, downgrading Mondi to “Underweight” from “Equal Weight” and slashing the price target from 1,000p to 800p. The firm's analysis suggests that Mondi's shares are trading at a premium relative to its long-term multiples, while the underlying market fundamentals remain weak, creating a mismatch between valuation and reality.

Barclays are another to move bearish, also downgrading Mondi to “Underweight” from “Equal Weight” and setting an even lower price target of 760p, a reduction from the previous 900p. This decision was driven by concerns about weak cash flow generation, soft demand in the packaging sector, and an oversupplied containerboard market. Barclays expressed skepticism about consensus expectations for Mondi's future performance, projecting lower EBITDA figures than the Bloomberg consensus for fiscal years 2026 and 2027. Further, the firm raised concerns about Mondi's free cash flow and the potential impact on dividend payouts, a key element for many investors.

JPMorgan also adjusted its stance on Mondi, downgrading the stock from “Overweight” to “Neutral” and reducing the price target from 1,240p to 1,180p. This downgrade was attributed to factors such as a flattened containerboard cost curve, primarily driven by lower costs in the recycled segment, unfavorable currency movements, and anticipated increases in near-term capital expenditures. These factors are expected to constrain Mondi's potential for upside growth.

Adding to the negative sentiment, S&P Global Ratings downgraded Mondi's credit rating from ‘A-‘ to ‘BBB+' with a stable outlook. This downgrade reflects a substantial decline in Mondi's EBITDA and increased debt issuances since 2023. S&P estimates Mondi's adjusted EBITDA for the twelve months leading up to June 2025 at €1 billion, a significant drop from the €1.9 billion reported in 2023.

The agency cited challenges such as lower selling prices due to excess containerboard capacity, reduced demand from industrial and consumer end-users, and declining demand for uncoated fine paper as key factors contributing to the downgrade.

The consensus among analysts points to headwinds for Mondi, including oversupply in the containerboard market and weakening demand across key sectors. The company's financial performance is under pressure, with concerns about cash flow, profitability, and debt levels. This confluence of negative factors has contributed to the recent downgrades and price target reductions, with shares already down 23.45% over the past 12 months.