Berenberg hikes target price on Johnson Matthey

Analysts at Berenberg raised their target price on diversified chemicals business Johnson Matthey from 1,650.0p to 1,800.0p on Tuesday but said the performance of its shares will likely depend on three factors.

Firstly, Berenberg said the rate of decline in its legacy autocatalysts and platinum group metal-refining business looked set to be a major part of the investment puzzle, as was the group's self-help and portfolio management, and the success of its growth segments – catalyst technologies and hydrogen technologies.

The German bank stated that prospects for the first two factors have "improved markedly" since its downgrade of the stock on October 2023. However, it also noted that the late-cycle nature of the legacy sales base in the catalyst technologies segment and well-publicised headwinds to the adoption of green hydrogen, left it "more cautious" about the development of Johnson Matthey's growth segments over the next year.

"The over 10% increases to our EPS estimates for FY25 and FY26 reflect: (i) the £250.0m buyback announced following notice of divestments; and (ii) higher margins in JMAT's Clean Air segment. Shares trade on 6.5x 2025 EV/EBITDA," said Berenberg, as it reiterated its 'hold' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com