Berenberg lowers target price on Synthomer

Berenberg stated on the one hand, the two units with the most scope for improvement – adhesives and nitrile – drove year-on-year increases in the underlying earnings of their parent segments.

"Due to a combination of restocking, self-help measures in adhesive solutions and improving volumes in nitrile latex supported results, volumes at the group level rose by circa 10% year-on-year, comfortably ahead of peers such as BASF," said Berenberg, which added that spreads in nitrile latex also appeared to have expanded during Q2.

On the other hand, the German bank, which has a 'buy' rating on the stock, noted that construction demand was subdued, leverage high at roughly £560.0m and said that generating positive free cash flow after a £31.0m negative result in H124 may prove difficult on a full-year basis.

However, Berenberg believes the nitrile recovery should shield the stock from macro headwinds in H224, and noted that few peers were as exposed as Synthomer to eventual macro recovery.

Reporting by Iain Gilbert at Sharecast.com