JP Morgan reiterates 'bullish' stance on Croda
JP Morgan has reiterated its 'overweight' rating on Croda International Plc following strong third-quarter numbers from the speciality chemicals group.
The bank flagged a number of reasons for its "bullish view".
It said: "The earnings downgrade cycle is largely behind us, with consensus estimates likely to remain stable even as much of the sector faces further cuts; improved execution in OSG delivery, operating leverage and self-help cost actions; [and] the market's pessimism on business fundamentals, particularly regarding competitive pressures and portfolio commoditisation, seems excessive to us."
It concluded: "Notwithstanding some possible near-term growth headwinds in the pharma business from the recent US policy changes, there is significant mid-to-long-term earnings upside optionality from Croda's strong pipeline of customer projects across multiple pharma segments.
"Improved earnings delivery close to the sitting consensus should likely drive a step-by-step rerating of the shares."
On Thursday, Croda reiterated its full-year outlook after third-quarter sales were bolstered by strong performances in its consumer care and life sciences divisions.
As at 0900 BST, shares in the blue chip were trading 2% lower at 2,833p, amid difficult trading across the London market.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.
