LONDON (ShareCast) - (ShareCast News) - Deutsche Bank has downgraded its rating on Croda International to 'hold' from 'buy' and cut its target price to 3,600p from 3,300p, citing subdued growth in 2016.
The bank said Croda has lagged behind all its consumer chemicals peers this year.

"We expect organic top line growth to remain relatively soft in 2017 (+2.9%), notably in the 'higher value' Consumer Care division and have cut our 2016-18E earnings per share by 1-3% due to lower sales and margin assumptions (target price lowered to 3300p)," Deutsche Bank said.

"Whilst we welcome Croda's focus on innovation and margins, the ongoing lack of organic top line growth remains a concern to us and at 20x 17E price-earnings ratio (broadly in-line with faster growing, less cyclical consumer chemicals peers) we see the valuation as fair and downgrade our recommendation to 'hold'."

The company, which manufactures engine lubricants, plastics, and chemicals for the health and beauty industry amid its large specialty chemicals portfolio, on 3 November affirmed its expectations for the full year as it reported its third quarter trading update.

Croda said demand remains subdued in a number of its end markets but profitability remains "strong" due to a improved product mi and innovation.

Shares dipped 0.06% to 3,280p at 0957 GMT.

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