Source: Sharecast
Berenberg said downgrading its recommendation for Synthomer at the trough of its earnings cycle was "disheartening", but noted that the alternative was potentially worse.
"Waiting through a prolonged trough during which even minor additional cuts to earnings forecasts could move leverage from uncomfortable to precarious," said Berenberg.
The German bank stated the main factors that could have significantly improved the margin of safety were, in its view, a quick recovery in nitrile latex and divestments. However, it said neither seems as compelling as a few months ago.
"The circa 5% cuts to our adjusted EBITDA estimates for 2025/26 primarily reflect lower margins in nitrile latex and more subdued performance in the energy business. Our 2025 EBITDA estimates are circa 8% below Bloomberg consensus," added Berenebrg.
Reporting by Iain Gilbert at Sharecast.com