Numis upgrades Johnson Matthey, expects double-digit underlying growth

12th Jun 2014 10:20

Despite a number of headwinds, Johnson Matthey should be able to deliver double-digit underlying growth this year, according to Numis Securities which upgraded its rating on the stock on Thursday from 'hold' to 'add'.The chemicals group impressed last week by reporting an underlying profit before tax (PBT) of £427.3m for the year ended March 31st, up 12% year-on-year and "well clear of our £420m expectation", according to Numis Analyst Charles Pick."JM faces some major headwinds this fiscal year, largely due to FX and a full 12 months impact from the revised Anglo Platinum contracts."However, a 'broadly in line' result has been indicated [company guidance] and this implies an expectation of underlying double-digit growth," Pick said.He said that for reported results to be flat year-on-year requires underlying PBT growth of 11.8%.Pick added that Johnson Matthey enjoys a number of "favourable medium-term business drivers" and growth prospects look "more assured" than sector peer Croda.Numis has hiked its target price for the stock from 3,470p to 3,642p.The shares were 0.1% higher at 3,250.36p by 10:41 on Thursday.BC