LONDON (ShareCast) - (Sharecast News) - Analysts at Canaccord Genuity lowered their target price on specialty chemicals company firm Synthomer from 350.0p to 250.0p on Thursday following the group's capital markets day.
Canaccord Genuity said Synthomer's capital markets day, subsequent covenant relaxation, and movements in commodities, particularly European gas and its consequences on demand, all suggested that the group was facing "a classic inventory drawdown period".

The Canadian bank stated that nitrile - the key driver of profitability in the 2019-22 period - now looked likely to have a further extension to its downturn, contrary to previous expectations, and was predicted to actually see a further decline in contribution in the 2023 trading year.

"Absent disposals, we now forecast debt ratios to be close to covenant levels in the middle of next year, before improving sharply in the second half of the year," said Canaccord, which reiterated its 'buy' rating on the stock.

"Given all this, and the obvious lack of certainty on margins coming out of the downturn, we are updating our forecasts and price target to reflect the weaker outlook. Critically, we do not expect a further equity raise, and as disposal proceeds come in we expect concern for such a raise to materially diminish."













Reporting by Iain Gilbert at Sharecast.com

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