Berenberg cuts Croda price target, keeps at 'buy'

The bank, which reduced the price target to 66p from 80p, said big profit warnings from Croda are rare - as are good entry points.

"The last time the company issued a trading update remotely as bearish as the one of 9 June 2023 was on 24 June 2014, when industrials were a larger part of mix," it noted.

"The smooth journey for Croda over the difficult subsequent period for the chemicals sector - one of Chinese overcapacity, then the Covid-19 pandemic, then the European energy crisis - speaks for the robustness of the business.

"The recovery of shares, which closed at around 22p following the 2014 warning, suggests it is a good idea to buy on weakness. We understand that US order books show some signs of improvement, and survey data (see our consumer team’s China review) point to a solid outlook for China.

"Europe is not yet at the end of squeeze on discretionary incomes, but volumes should improve by the start of FY24."

Berenberg said the 20% cuts to its earnings per share estimates reflect lower sales volumes and prices in consumer care and crop protection, in addition to lower prices for by-product sales in the industrial specialities segment.