Shares digital

by Rachel Robson

Chemicals group Johnson Matthey has been downgraded by both Evolution Securities’ Peter Cartwright and UBS’ Laurent Favre to ‘reduce’ and ‘sell’ respectively.

Cartwright has lowered his recommendation from hold on ‘valuation grounds as a result of the company’s share price movement’, but has made no adjustments to his price target of £19.10.

Favre, meanwhile, has downgraded the group from neutral, turning less positive on autocatalysts stocks following their significant outperformance against ‘the market, the sector, and the peer group of defensive growth stocks’. Favre believes that growth is now decelerating for autocatalysts as ‘we enter a global slowdown’ and sees ‘acceleration of growth elsewhere, namely in industrial gas where late cyclicality is being complemented by emerging applications related to the environment.’

However, he too has left his price target of £18.70 unchanged. Over the past few years, the shares of Johnson Matthey have put in a tremendous performance and have already risen as much as 11% this year, although have recently slipped back to their current £19.90.

Favre says that although he does not see significant earnings risks for Johnson Matthey, the group is not totally immune to the economy and ‘we see increasing concerns in important areas like the US and European car markets’, as well as the truck market.

Favre has trimmed his expectations for autocats and HDD (heavy-duty diesel) but has upgraded his currency assumption as well as precious metal products forecasts due to continued strength in PGM (platinum group metals) prices since the start of the year. Favre is forecasting an EPS of 88.65p for 2008.