Shares in Croda International PLC (LSE:CRDA) surged 7.6% to 3,148p on Tuesday after JPMorgan reaffirmed its 'overweight' rating and raised its price target to 4,000p, arguing that the worst of the earnings downgrade cycle is now over and the company is poised for a multi-year recovery.
Analyst Chetan Udeshi sees adjusted EPS growing at a 13% compound annual rate between 2025 and 2028, supported by organic and inorganic investment returns, ongoing cost actions, and improving capital returns.
JPMorgan’s 2026/27 EPS forecasts are already 4–5% ahead of consensus, underlining its confidence in Croda’s rebound.
The bank said market pessimism over Croda’s fundamentals is overdone, noting the company’s post-COVID margin compression is stabilising.
While EBIT margins have dropped to 17% from pre-pandemic highs of 25%, Croda still leads the sector and is expected to target a return to mid-20% margins in its FY25 results due on 24 February.
JPMorgan also expects the unveiling of a new mid-term financial framework alongside the results to reassure investors and support a potential re-rating. On current multiples, Croda trades at a discount to its historic forward P/E of around 20x.