DAVY VIEW

DS Smith’s recent results were negatively impacted by the poor performance of its recent acquisitions. This is not surprising given the deterioration in market conditions since the completion of the deals. However, shareholders have to bear the cost of this as the company cancelled its dividend to focus on balance sheet repair. Until DS Smith has greater clarity around the outlook for the business and its capital allocation strategy, it is hard to see why investors should get interested. We are maintaining our ‘Neutral’ rating and cutting our price target to 300p (335p previously).