Numis downgrades DS Smith to ‘hold’

It noted the shares have rallied by around 30% year-to-date and now trade on FY25 EV/ EBITDA and price-to-earning multiples of 6.8x and 11.3x, respectively, which are close to the stock's medium-term averages.

"The competitive tension indicated by two competing bidders for DS Smith raises the prospect of a materially higher valuation of the stock in the near-term," Numis said.

"While we cannot rule out a competitive bid situation emerging, we think prospects may be limited by Mondi's historic lack of appetite for large scale M&A and modest valuations paid for previous acquisitions."

Numis said it expects the shares to trade closer to the value implied by International Paper's proposal and revised its price target up to 415p from 385p.