Analyst Coverage Restart

Kepler Cheuvreux has resumed coverage of Johnson Matthey plc, assigning a “buy” recommendation and a target price of 2,450 pence per share. The brokerage argues that the market undervalues the company’s position in the gasoline‑hybrid segment, where Johnson Matthey has secured nine new platforms that together represent 25 % of the European hybrid market.

The note also outlines a planned acquisition of Cormetech, valued at $360 million, equivalent to 10.3 times the target’s projected 2026 EBITDA. The acquisition is intended to broaden Johnson Matthey’s stationary emissions‑control portfolio, including applications in data‑centre backup power plants that generate carbon emissions.

Financial forecasts presented by Kepler project EBITDA of £558 million for the 2026‑27 fiscal year on sales of £2.80 billion, which is roughly 1 % below the current consensus estimate. For 2027‑28, EBITDA is expected to rise to £597 million on sales of £2.89 billion, marginally above consensus. Reported figures for 2025‑26 were EBITDA of £485 million and sales of £2.56 billion.

Adjusted EBIT is forecast at £423 million for 2026‑27 and £457.7 million for 2027‑28, compared with £340 million in 2025‑26. Adjusted net profit is projected at £250.7 million and £270.6 million for the two forward years respectively. Corresponding adjusted fully‑diluted earnings per share are estimated at 148.33 pence for 2026‑27 and 160.11 pence for 2027‑28, versus 127.81 pence in 2025‑26; consensus EPS figures stand at 154.02 pence and 171.67 pence for the same periods.

The company’s net financial debt stood at £806 million at the end of 2025‑26. Kepler expects the balance sheet to turn into a net cash position of £73.9 million in 2026‑27 before reverting to net debt of £188 million in 2027‑28. Free cash flow is projected at £282.8 million for 2026‑27 and £463.7 million for 2027‑28, compared with £401 million generated in 2025‑26.

Valuation is based on a multi‑stage discounted cash‑flow model using a beta of 1, a terminal growth rate of 3 % and a weighted‑average cost of capital of 10.1 % for 2026, increasing to 11 % by 2035.

Johnson Matthey’s shares have declined 5.6 % year‑to‑date and have traded between 1,688 pence and 2,388 pence over the last 52 weeks. The company’s market capitalisation is approximately £3.4 billion with a 100 % free float.