Croda International PLC (LON:CRDA) has been upgraded to ‘buy’ from ‘neutral’ by analysts at Citi, saying the group’s recent £736mln acquisition of Spanish fragrance firm Iberchem marked a “step change” for the chemical group.
In a note on Friday, the bank also raised its target price for the FTSE 100 group to 7,400p from 6,000p, saying Iberchem will provide Croda with “access to the fastest-growing regions within the Fragrance space” as well as the ability to realise “significant revenue synergies through cross-selling”.
READ: Croda snaps up Spanish fragrances firm Iberchem for £736mln
Citi’s analysts also said the acquisition will provide Croda with “an opportunity to partake in what is a rapidly consolidating industry”, which when coupled with a strong balance sheet to support inorganic growth represented a “compelling investment case”.
Announcing the Iberchem purchase on Wednesday, Croda said the acquisition will drive its strategic objectives by focusing on faster-growing core consumer markets, adding a new, high-growth adjacency to its existing businesses, where it can gain significant exposure to emerging markets.
Croda shares rose 1.8% to 6,360p in mid-morning trading.