Nucor earnings beat by $0.08, revenue fell short of estimates
On Tuesday, BofA Securities revised its stance on Johnson Matthey Plc (LON:JMAT:LN) (OTC: JMPLY), downgrading the stock from Buy to Neutral and adjusting the price target to £17.00 from the previous £18.00. The stock, currently trading at a P/E ratio of 4.84x, appears undervalued according to InvestingPro analysis. The downgrade by BofA Securities analyst Matthew Yates stems from several concerns that have surfaced, potentially impacting the company’s future performance and share price valuation.
Yates cited the first issue as the potential disruption to Johnson Matthey’s Clean Air business due to tariffs that could affect North American auto and truck production. Although this is not the expected primary outcome, the risk posed by such tariffs has contributed to the lowered confidence in the stock. Despite these concerns, InvestingPro data shows the company maintains a "Good" overall financial health score, with particularly strong profitability metrics.
The second concern involves the risks associated with the ramp-up of the company’s planned refinery upgrade. This project is anticipated to be a significant factor in the release of working capital in 2026/27. Yates expressed apprehension about the execution of this upgrade and its implications for the company’s financials.
The third area of concern highlighted by Yates is the uncertainty surrounding the mid-term Catalyst opportunity, especially given the unclear future of U.S. clean transportation fuel regulation. The regulation in question, known as 45Z, is scheduled to expire at the end of 2027. This uncertainty has already led to investment hesitancy among customers, as exemplified by Air Products (NYSE:APD)’ recent cancellation of a sustainable aviation fuel project in California.
As a result of these concerns, Yates has adjusted the forecast for Johnson Matthey’s earnings before interest and taxes (EBIT) for 2027 downwards by 7%, which has shifted BofA Securities’ position from above consensus to now below. While analysts expect a revenue decline this year, InvestingPro reveals 8 additional key insights about the company’s prospects. This reassessment of the company’s earnings potential has led to a more cautious outlook on the stock’s attractiveness from an investment perspective.
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