Hargreaves Lansdown believes that the move to cut vehicle emissions is both good and bad for catalytic converter maker Johnson Matthey (LON:JMAT), Citywire reports. The comments came after the company updated investors on its full-year performance yesterday, posting a fall in profits, while unveiling a rise in revenue and hiking its payout to shareholders.
Johnson Matthey’s share price, which rose on the back of the results in the previous session, is building on gains today, having added 3.32 percent to 3,629.68p as of 09:46 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.61 percent higher at 7,724.77 points.
HL weighs in on Johnson Matthey
Citywire quoted Hargreaves Lansdown equity analyst Nicholas Hyett as commenting yesterday that on the one hand, Johnson Matthey was “benefitting from the campaign to reduce vehicle emissions, which demands that ever more sophisticated catalytic converters are strapped to car exhausts, and gasoline sales more than offsetting weakness in diesel following the Volkswagen scandal”. The analyst, however, also noted that the shift to electric cars, the campaign’s logical conclusion, would render the specialty chemical group’s core product obsolete – since electric cars don’t have an exhaust at all.
“Fortunately, a switch to electric vehicles isn’t going to happen overnight – with the necessary infrastructure costing billions and taking years to install,” Hyett continued, adding that that has given the company “the time to pivot to batteries”.
Analyst ratings update
Deutsche Bank reaffirmed Johnson Matthey as a ‘buy’ today, without specifying a price target on the shares. According to MarketBeat, the London-listed group currently has a consensus ‘buy’ rating and an average price target of 3,592.22p.