Analysts at Berenberg raised their target price on diversified chemicals group Johnson Matthey from 3,700.0p to 3,800.0p on Friday, stating the group was in the throes of a “metamorphosis”.
Berenberg pondered if in ten years time when MBA students come to study examples of businesses successfully responding to technological disruption – would Johnson Matthey make the list?
The German bank stated the received wisdom was “clearly no”, otherwise shares would not be “so cheap”, and noted that an “ill-tempered stock price reaction” to last month’s 2021 results “for no apparent reason other than higher capex” without a “near-term game-changer to show for it”, underlined this scepticism.
“Yet the drift of JMAT’s shares into an at times lazy consensus of managed decline is increasingly at odds with its rapid advances in hydrogen and progress towards commercialisation of high-end battery materials,” said the analysts.
Berenberg, which reiterated its ‘buy’ rating on the stock, highlighted that within the next four years, Johnson Matthey “could” be generating “well over” £200.0m in annual sales of its fuel cells alone, not far from market leader Ballard, a company worth around 60% JMAT’s market cap.
The analysts added that the increases to their forecasts primarily reflected the impact of higher platinum group metal prices on the efficient natural resources segment, along with a faster near-term recovery in autocatalysts.
Analysts at Citi raised their target price on real estate investment trust Segro from 1,090.0p to 1,342.0p on Friday, citing multiple long-term opportunities.
Citi stated the logistics sector has, on its estimates of sector growth and tenant affordability, a long-term opportunity from like-for-like growth as market rents drive higher.
The bank also stated that Segro would likely benefit from development pipeline deliveries as it works through its land bank.
“There are likely upside risks including higher LFL growth than expected, faster and more profitable execution of development pipeline than expected, and the potential re-imagining of existing standing assets the logistics market is likely to evolve with more densification and alternative/dual-use potential,” said Citi.
However, Citi highlighted that on its base case estimates, the ‘buy’ rated Segro trades on a roughly 39x full-year 2021 price-to-earnings ratio.