Broker snap: Croda enjoys pricing power

24th Feb 2011 12:37

UBS keeps its positive stance on speciality chemicals group Croda as fourth quarter results came in ahead of expectations.Croda reported fourth quarter organic growth of 11.6%, with 6% volumes growth in line, but the 6% price increases came as a surprise and were well ahead of the broker's flat estimates, as the company succeeded in passing on increased costs to its customers.The results translated into earnings per share estimates being beaten by 14% in the quarter, and 3% over the full year."We see no reason to trim positions of a company with pricing power, growth and yield: sold out in 2010, Croda will make every effort this year to expand capacity, generating circa 5% headroom for volume growth," the broker says.With a positive outlook for 2011, UBS raises the target price to 1,850p, from 1,730p, and sticks with a 'buy' rating.