UBS Downgrades Essity to Sell Amid Rising Raw Material Costs, 'Weaker' Growth Expectations

06:56 AM EDT, 09/04/2026 (MT Newswires) -- UBS Global Research downgraded Essity (ESSITY-B.ST, ESSITY-A.ST) to sell from buy, citing a looming cycle of raw material inflation and "weaker" sales growth that is expected to miss midterm targets. "We expect downside risk as Essity enters a new cost inflation cycle: (i) organic sales growth is likely to undershoot consensus in H2 and 2027, remaining below the group's >3% medium-term target; (ii) EBITA faces pressure from rising raw material costs, with consensus underestimating both inflation headwinds and limited pricing recovery; and (iii) a potential Consumer Tissue exit could prove more complex than the market might assume," according to a Thursday note. Analysts at UBS project full-year 2027 organic sales growth of 2.6%, trailing both the consensus forecast of 3.2% and Essity's target. "Consumer Tissue volumes are likely to come under pressure as prices rise, Personal Care continues to face structural headwinds in Baby Care, and Health & Medical is seeing softer end markets and slower pricing recovery. We also anticipate that H2 sales growth may fall short of consensus, driven primarily by weaker pricing," the note said. Against this backdrop, the research firm lowered the stock's price target to 235 kronor from 280 kronor. UBS also cut its 2026 through 2028 EPS estimates by 6%.