- Croda International
- 25 March 2026 09:46:55
Source: Sharecast
Morgan Stanley said investors have mixed views about Croda's pricing ability, given historical competitive pressures through the 2021/22 inflationary cycle and price-mix negatives in 2025, to drive operational gearing.
"However, Croda performs particularly well in an inflationary cycle, passing through input inflation across its portfolio typically at circa 1 quarter lag to higher raw materials increases - faster than peers typically requiring circa 2 quarters - thereby broadly tracking its inventory levels (circa 2.6 months)," it said.
"As a result, we believe Croda will be one of the fastest players to pass on input inflation to customers (noting that most of its ingredients represent a single-digit percentage of total customer production costs), offering absolute profit protection."
The bank also noted that Croda is one of the few ingredient names with limited/no downside risk to FY26 adjusted earnings per share consensus estimates, and said it now offers superior 2026 LFL/adjusted EPS growth prospects to most.
Morgan Stanley lifted its FY25/26/27 EPS estimates by 4.0%/+3.6%/+3.7% respectively to reflect higher pricing, slightly lower volumes - mainly across consumer care and industrial specialties - and slightly lower FX negatives.
At 0945 GMT, the shares were up 3.9% at 2,849p.