Berenberg lowers target price on Johnson Matthey

Analyst at Berenberg lowered their target price on chemicals company Johnson Matthey from 3,600.0p to 2,800.0p on Friday, stating Thursday's announcement that it would exit its nascent battery materials business changed the nature of the stock's equity story.

Berenberg said Johnson Matthey's equity story had now changed from mid-term growth to a probable break-up, in its view.

While the German bank acknowledged a group breakup had not been confirmed, it reckons that the selection of Liam Condon as new chief executive was telling as his previous employer, Bayer, was known for portfolio management.

"We would speculate that the splitting from battery materials will put the company on course for another set of break-ups to extract value," said Berenberg, which reiterated it 'buy' rating on the stock.

The German bank stated the reductions to its earnings estimates reflected a combination of lower auto production volumes and European diesel market share, as well as a margin squeeze in the health business and the impact of lower palladium and rhodium prices on the efficient natural resources segment.