UBS downgrades Johnson Matthey to Neutral on slower growth prospects

19 September 2013 11:13  [Source: ICIS news]

LONDON (ICIS)--Switzerland-headquartered bank UBS downgraded on Thursday its outlook for UK pharma company Johnson Matthey to ‘Neutral’, citing a less attractive risk/reward profile.

Analysts at the bank said several growth drivers they had factored into their outlook for the company, including emissions technology and its process catalyst business, have “mostly played out”.

According to UBS, the company’s emission control technologies (ECT) division is likely to be a driver of growth in the short-term as new emissions standards are phased in across various markets, while process catalyst is likely to buoy the company’s earnings in the longer term.

However, the current valuation of the company leaves little margin for error, UBS added. The company’s 12-month price target for Johnson Matthey is £29.10 per share, a modest increase from the £28.96 per share the company’s stock was trading for in early trading on Thursday.

In the near term we continue to expect ECT to be the incremental earnings driver as new emission standards are phased in,” UBS said in an investor note.

“Longer term however we expect growth to be supported by the Process Catalyst business, which has higher margins, high percentage of recurring sales, and upside potential from new plant builds in the US and the development of alternative energy sources in China,” the bank added.

($1= €0.74, €1 = £0.84, $1 = £0.62)


By: Tom Brown
+44 208 652 3214



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