Jefferies upgraded shares of Johnson Matthey on Wednesday to ‘buy’ from ‘hold’, lifting the price target to 2,600p from 2,100p after activist investor Standard Industries took a stake in the company.
Last week, New York-based Standard Industries took a stake of around 5% in JMAT.
“There is no communication from the investor (aside from the disclosed investment), but this follows a track record of active investment in Chemicals globally, Europe and in catalyst markets (Clariant),” Jefferies noted. “Most relevant is its recent acquisition of W.R. Grace (major process catalyst producer – similar to JM’s ENR process technologies business) last year at a 74% premium to the undisturbed price.”
The bank said Standard Industries “would appear to be something like an ideal owner” for the JM business.
“This is given its operational overlap on the process catalyst side (not an antitrust issue in our view) and an ability to take a longer-term view on cash generation potential from the Clean Air business.”
Jefferies also said that higher platinum group metals prices will likely offset weaker auto production in the shorter term.
At 1035 BST, the shares were up 2% at 2,269.90p.
