Johnson Matthey (LSE:JMAT) Following Citi Reboot, Is The Simpler Story Still Undervalued?
Citi’s renewed coverage of Johnson Matthey (LSE:JMAT) after the sale of Catalyst Technologies and the purchase of Cormetech has refocused attention on the reshaped group and its shareholder return plans.
The latest move by Citi comes after a stronger run in the last month, with a 1-month share price return of 10.32% and a 1-day gain of 2.44% to £25.22. However, the share price remains down 13.39% year to date, while the 3-year total shareholder return of 86.60% points to longer term momentum building around Johnson Matthey’s reshaped focus and capital return plans.
Scan how other materials players are lining up for potential capital return stories similar to Johnson Matthey by reviewing the curated 7 high quality undervalued stocks.
The question now is whether Johnson Matthey’s latest bounce reflects investors warming to a cleaner, simpler business, or if sentiment has just swung ahead of what the current valuation supports.
Most Popular Narrative: 8% Undervalued
On the most followed narrative, Johnson Matthey screens as modestly undervalued against its fair value estimate of £27.39, compared with the latest close at £25.22. That gap rests on a detailed set of earnings, margin and capital allocation assumptions rather than only the recent share price bounce.
Ongoing transformation efforts aimed at increasing efficiency and reducing costs are expected to continue to positively impact net margins and overall earnings. Successful platform wins and building strategic customer relationships could stabilize or grow Clean Air revenues despite challenging market conditions in the automotive sector.
See why 16 investors see Johnson Matthey as 8% undervalued.
Result: Fair Value of £27.39 (UNDERVALUED)
Still, weak end markets for Clean Air and a slowdown in Hydrogen Technologies, with lower sales and higher operating losses, could quickly puncture this 8% undervalued story.
Find out about the key risks to this Johnson Matthey narrative.
Next Steps
There is a mixed mood around Johnson Matthey so far, with both risk and reward signals on the table. Consider moving quickly and stress test the numbers yourself using the 2 key rewards and 2 important warning signs.
Looking for more investment ideas beyond Johnson Matthey?
If Johnson Matthey has sharpened your focus on where capital can work harder, do not stop here. Broaden your watchlist now using these focused ideas.
- Target resilient income streams by reviewing companies screened as potential yield candidates through the 2 dividend fortresses.
- Hunt for quality at a discount by checking the curated set of companies that appear attractively priced in the 7 high quality undervalued stocks.
- Prioritise sleep-at-night portfolios by scanning a 4 resilient stocks with low risk scores that highlights businesses with lower measured risk profiles.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com