Hargreaves Lansdown argues that higher air pollution standards are benefitting Johnson Matthey (LON:JMAT), with the chemical specialist seeing growing demand for batteries, Citywire reports. The comments came after the blue-chip group revealed a 10-percent rise in revenue and a 19-percent surge in operating profit for the first half of its financial year. The company further raised its sales growth targets for the full year.
Johnson Matthey’s share price rallied in the previous session as investors digested the results, gaining 13 percent and lending support to the benchmark FTSE 100 index which closed more than one percent higher. The group’s shares have posted a fall in early morning trade this Thursday, having given up 1.75 percent to 3,086.00p as of 08:07 GMT, as compared with a 0.43-percent dip in the Footsie.
Hargreaves Lansdown weighs in on results
Citywire quoted Hargreaves Lansdown analyst Nicholas Hyett as commenting yesterday that stricter rules around air pollution meant that catalytic converters were “commanding an increasing share of total automotive spend, and with Johnson Matthey also gaining market share the result is some very healthy profit growth in the dominant clean air division”.
The analyst further noted that over the long term, it was “the batteries business that’s got investors excited”.
“It’s a bet that needs to come off, since electric vehicles don’t need the catalytic converters that are Johnson Matthey’s bread and butter,” Hyett concluded.
Other analysts on chemical specialist
The Financial Times meanwhile quoted Barclays analysts as commenting that the “market was positioned for a guidance cut so raising the outlook is a firm positive”.
According to MarketBeat, the chemicals specialist currently has a consensus ‘buy’ rating and an average price target of 3,962.50p.