Johnson Matthey PLC (LON:JMAT) has been upgraded to ‘neutral’ from ‘underweight’ by JP Morgan as the bank said investors were likely to gravitate towards “more defensive and quality stocks” in the chemicals sector amid fears that a recession will cause “more pain” for the industry in the short term.
In a sector note on Tuesday, which saw target prices slashed across the board, JP Morgan said the coronavirus was likely to serve as a “significant headwind” for the sector over the second quarter in addition to “significant demand weakness” into the second half of the year.
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However, analysts said that when the impact from coronavirus subsided, there could be a “substantial” recovery in demand and earnings for the industry, and as result, for investors “with a strong stomach to digest more near-term volatility, there might be some opportunities”.
Aside from its upgraded rating, JP Morgan cut JMAT’s target price to 2,300p from 2,850p alongside a number of its London-listed peers.
Croda International PLC (LON:CRDA) was cut to 4,025p from 4,500p, while Elementis plc (LON:ELM) was reduced to 140p from 170p, Synthomer PLC (LON:SYNT) was lowered to 242p from 300p and Victrex plc (LON:VCT) was knocked down to 1,750p from 2,150p.
Shares in Johnson Matthey were down 1.1% to 1,833p in mid-morning trading.