Domtar upgraded to outperform at RBC Capital Markets

NEW YORK, Jul 14, 2008 (Thomson Financial via COMTEX) -- DTC | Quote | Chart | News | PowerRating -- Domtar Corp. Monday was upgraded to outperform from sector perform at RBC Capital Markets, which cited "compelling" valuation given the recent decline in the company's share price.

The stock is down 56% over the past 52 weeks, closing Friday at $4.78. RBC said the company has "a number of weak quarters ahead of it, given the significant cost inflation experienced by all paper producers," but that "the valuation is becoming compelling and see limited downside over the next 12 months."

RBC has a $7.25 price target on the company, and noted that Domtar expects to reduce debt by $400 million to $500 million between 2008 and 2009. The reduction would bring the ratio of debt to total capital to 37%, below the company's target of reducing it to a 40% ratio. Ryan Vlastelica rv/tk1

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