Jefferies downgraded Johnson Matthey to ‘underperform’ from ‘buy’ on Thursday and cut the price target to 2,300p from 4,200p, saying it expects the shares to underperform as the company’s automotive catalyst business remains weak.
The bank said earnings growth from battery cathode materials and hydrogen will fail to compensate for this.
“We are around 4% below consensus for the next three years, which we believe do not full reflect the delay/downgrade to the auto recovery,” it said.
Jefferies noted that the stock trades on 7x EV/EBITDA, which is a 28% discount to peers. “However, we prefer non-technically disrupted cyclicals such as buy-rated BASF trading at a 5% discount to JMAT,” it said.
