- Johnson Matthey
- 29 May 2025 14:26:29
Source: Sharecast
Berenberg said Johnson Matthey's share price has "quite justifiably rallied" by over 20% since the announcement on 22 May that it would divest its Catalyst Technologies segment to Honeywell for £1.8bn, or a 13.3x enterprise value/underlying earnings ratio.
"The decision to divest for a multiple higher than the group may not only benefit JMAT's valuation directly, but it also removes the narrative dissonance caused by growth-oriented and cash-cow
businesses being housed in the same company," said Berenberg. "Now, there is no such contradiction. JMAT has embraced a role as a brutally effective cash generator, even if earnings appear likely to begin declining in the late 2020s."
The German bank stated the new group has an "endearing simplicity" that may highlight its quiet success in restoring margins in its Clean Air segment. However, Berenberg said it may also leave the remaining company a potential private equity bid target.
Berenberg reiterated its 'hold' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com