Berenberg lowers target price on Johnson Matthey

Berenberg said Johnson Matthey’s interim results were a case of "soft results meet bad luck", in its view, with underlying earnings of £156.0m down 13% year-on-year, in line with consensus estimates.

The German bank noted that while the news led to a sell-off of shares that was similar to the group's multi-year lows, it also pointed out that value stocks that miss earnings often fall by similar amounts.

"The platinum group metals services segment, where stabilised prices may have raised investor hopes for some, was the primary driver of the miss, owing to refinery downtime and lower automotive scrap volumes," noted Berenberg, which has a 'hold' rating on the stock.

Shares also reacted poorly to higher-than-expected net debt, which came in at £783.0m versus estimates of £703.0m in consensus, on the back of higher payables as new IT systems enabled suppliers to be paid earlier.

However, Berenberg said it believes that the absence of upside to consensus forecasts and uncertainty around the impact of tariffs on the automotive sector may leave shares treading water in coming months.

Reporting by Iain Gilbert at Sharecast.com