Broker tips: Johnson Matthey, Countryside Properties

Deutsche Bank downgraded its stance on shares of specialty chemicals company Johnson Matthey to ‘hold’ from ‘buy’ and cut its price target to 2,200p from 2,700p after full-year results on Thursday.

The bank said it likes the group's well-run asset base - with a high degree of variable costs in Clean Air - strong balance sheet and liquidity position, and management's ongoing focus on organisational efficiencies, all of which were highlighted in the results.

However, it has downgraded the stock for two key reasons.

Firstly, DB said: "We expect an increasing ramp-up of cathode supply globally closer to 2024, JMAT’s targeted commercial launch of its novel eLNO cathode material, unfavourably shifting the ‘crunch point’ of price pressure in the industry," it said.

Secondly, it expects a delay in benefits from growth investments made in Clean Air as automotive production does not meaningfully pick up over the short/medium term, in addition to the potential for delayed phasing in of some emission standards.

Johnson Matthey announced on Thursday that it will cut 2,500 jobs and halve its dividend.

Analysts at Berenberg said on Friday that they were "encouraged" by Countryside Properties' handling of impacts stemming from the Covid-19 pandemic.

Berenberg stated that following a virtual fireside chat with Countryside chief executive Iain McPherson and other member's of the group's board, where they discussed topics ranging from the current short-term impact of Covid-19 on the company, progress with the phased return to work and the medium-term outlook, it was "upbeat" about the firm's growth prospects in the medium and long term.

However, the German bank said it was also aware of the "difficult few months" that lie ahead for the whole housebuilding industry in the UK.

Berenberg also highlighted how Countryside shares had fallen 50% by 20 March from a peak of 540.0p in late February 2020, before recovering some lost ground in recent weeks to now be down 30% year-to-date.

The analysts cautioned that the company's 2020 numbers would "clearly be weak", as they would be across the sector as a whole, so their focus was more on the shape for 2021 and thereafter.

"For the full year ending September 2021, the business is currently trading at 12.5x P/E and 1.8x P/TNAV. Once the current crisis has been navigated, we believe it has much more to offer," concluded Berenberg, which kept its 360p target price and 'buy' rating unchanged.