Deutsche Bank ups Johnson Matthey to ‘buy’, lifts price target

The bank said it sees upside potential from a) a successful pivot or b) a break-up.

"Johnson Matthey is largely perceived as an autocatalyst business with an end date," DB said.

It argued that this overlooks large opportunities for the company. "1) We believe that management change is likely to unlock significant value. Ultimately, the situation can be win-win: if the growth/reinvention plan fails a value up to £35/share could be realised in a blue sky breakup scenario.

"2) There is still substantial continued value in the autocatalyst business. 3) Though we expect earnings declines this year in PGM services, the segment is well positioned to benefit from growing demand for recycled materials.

"4)There is significant unrecognised potential in catalysts & hydrogen which can drive growth/reinvention."

Deutsche noted that JMAT trades at 6.8x EV/EBITDA and said this looks too low given the options.

At 1500 BST, the shares were up 1% at 1,771.50p.