Jefferies upgrades Croda to 'buy', hikes price target
By Michele Maatouk
Date: Wednesday 14 Sep 2022
(Sharecast News) - Jefferies upgraded Croda International on Wednesday to 'buy' from 'hold' and hiked the price target to 8,200p from 7,000p.
"With the Avanti number for FY23 now based, attention can turn to the long-term growth outlook on the Life Sciences business," the bank said.
"We expect the company's LS update in October to set out the pipeline opportunities beyond Covid vaccines and demonstrate a path for transformational growth in the division. Additional catalysts come from capital deployment from one of the leading management teams in the sector."
Jefferies noted that Croda has the best balance sheet in the industry and said management is an effective allocator of capital, divesting Materials businesses at the top of the cycle and redeploying into high-growth niches at relatively favourable valuation multiples.
"We would expect the company to redeploy PTIC (Performance Technologies and Industrial Chemicals) proceeds into either of the remaining businesses," it said, adding that this can drive a 13% upgrade to estimates.
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