BofA Upbeat on Essity Amid Improving Volume Trends in Q2; Price Objective Up

08:10 AM EDT, 07/20/2026 (MT Newswires) -- BofA Global Research is optimistic on Essity (ESSITY-A.ST, ESSITY-B.ST) after the Swedish hygiene and health company's second-quarter results demonstrated "reassuring" volume trends following some price reinvestments. Essity's group sales reached 35.06 billion kronor in the quarter, ahead of the research firm's and market forecasts of 34.22 billion kronor and 34.84 billion kronor, respectively, according to a Monday note. The company logged a volume growth of 1.4%, 30 basis points higher than consensus. "Looking forward to 3Q26, we expect [organic sales growth] to improve to +1.5% as comps soften and price turns positive (+0.9%) to mitigate [cost of goods sold] inflation (energy, pulp, chemicals). Consequently, volume should slow (BofA: +0.7%)," analysts wrote. "We forecast better pricing to lead to some cost absorption while we continue to see raw material costs headwinds, and we see gross margin reaching 31.6% in 3Q26." With this in mind, BofA raised its price objective to 305 kronor from 300 kronor while maintaining the stock's buy rating. Looking further ahead, the group adjusted EPS estimates were lifted by 1.7% for 2026 and 2028, and 1.8% for 2027. Group sales forecasts for all three years were also increased.