Source: Sharecast
Bernberg said a "well-received divestment" of Johnson Matthey's catalysts technologies segment, improvement in FY25 margins for clean air and higher platinum group metal prices all played a role in the stock's outperformance.
As a rough estimate, Berenberg believes that around half of Johnson Matthey's share price outperformance can be attributed to the divestment, 35% to PGM prices and 15% to higher margins in clean air.
The German bank also said higher, more volatile PGM prices mean consensus underlying earnings estimates for Johnson Matthey were "a mid-single-digit percentage too low for the next few years".
"Yet the shares have run hard and additional PGM capacity will come to the market with the Platreef project in 2026," said Berenberg, which retained its 'hold' rating on the stock.
"The mid-single-digit percentage increases to our EPS estimates for FY26-27 reflect the tailwind to the PGM Services segment from higher PGM prices and volatility. The shares trade on FY27E EV/EBITDA of c6x and FCF yield of just over 10%, which we think is fair for a cash-focused ex-growth asset."
Reporting by Iain Gilbert at Sharecast.com