Synthomer (LSE:SYNT) PLC and Johnson Matthey PLC (LSE:JMAT) advanced as analysts at UBS took a more favourable stance on both companies in notes published today helping to send shares higher.
Shares in Synthomer (LSE:SYNT) were given a further lift by news of the £208mln sale of its laminates business to Surteco North America, proceeds of which the company said will be used to pay down debt.
UBS upgraded Synthomer to buy from hold despite cutting its price target to 150p from 220p.
“We believe the shares do not price in any recovery in EBITDA or deleveraging of the balance sheet” the bank said.
The 'Buy' base case assumed that 2023 earnings will benefit from the £150mln to £200mln cost savings programme focused on optimising manufacturing and the commercial focus of the group, which should drive an inflection in EBITDA, analysts at UBS wrote.
The broker felt the share price also factors in an equity issue, which it believes is unlikely.
On Johnson Matthey, UBS has upgraded its rating to 'neutral' from 'sell' despite trimming its EBIT estimates by 2% for the fiscal year 2023/24.
Alongside the rating change, the broker also upped its price target to 2,100p from 1,750p citing two driving forces behind this: 1) a reappraisal of the medium-term growth opportunities of the industrial catalysts business; and 2) the potential for break-through announcements in contracts for Hydrogen Technologies in the coming months.
The broker has a base case net present value of £650mln for the Hydrogen Tech business but has an upside valuation of £850mln. which would yield an additional 110p/share.
Shares in Synthomer leapt 10% to 129.2p while Johnson Matthey is 3% higher at 2,109p.