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On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its price target for Croda International (LON:CRDA:LN) (OTC: COIHY), a $5.5 billion specialty chemicals company, reducing it from GBP40.00 to GBP34.00. Despite this change, the firm maintained its Hold rating on the stock. The company’s shares have shown recent momentum, posting a notable 9.4% gain over the past week, according to InvestingPro data. According to Deutsche Bank, Croda reported a robust trading update, with first-quarter local currency sales rising 9% year-over-year, surpassing consensus estimates by 3%. This performance was largely attributed to the Consumer Care sector, with the Fragrance & Flavors (F&F) division being highlighted as the standout contributor.
The company’s profit before tax (PBT) met management’s expectations, and the positive beginning to the year led to a reiteration of the full-year adjusted PBT guidance. However, Croda’s management has expressed caution regarding the outlook, citing low visibility and anticipating that while second-quarter growth is expected to remain strong, it will likely moderate compared to the first quarter.
The analyst from Deutsche Bank, Virginie Boucher-Ferte, emphasized the company’s broad-based volume growth as a key driver of the positive first-quarter results. This growth was particularly pronounced in the Consumer Care division, which includes personal care, health care, and crop care products, with the F&F division performing exceptionally well within this segment.
Despite the lowered price target, Deutsche Bank’s retention of the Hold rating suggests a neutral outlook on Croda’s stock, indicating that the firm does not currently see compelling evidence to either buy or sell shares. The analyst’s commentary indicates that while the company has had a strong start to the year, there are uncertainties that may impact its performance going forward. Notably, InvestingPro data reveals the company’s strong dividend track record, maintaining payments for 34 consecutive years, with a current yield of 3.4%. InvestingPro analysis suggests the stock is currently undervalued, with several additional metrics and insights available to subscribers.
Investors and market watchers will likely monitor Croda’s progress closely, especially in the context of the cautious outlook provided by the company regarding future growth. The adjustment in the price target by Deutsche Bank reflects a more conservative valuation of Croda’s shares amid the acknowledged low visibility for the upcoming quarters.
In other recent news, Croda International has been the subject of several analyst evaluations. Goldman Sachs downgraded Croda’s stock rating from Neutral to Sell and significantly reduced the price target from £38.00 to £24.30. This downgrade is attributed to concerns over growth prospects in the Care Chemicals and Life Sciences segments, influenced by US-China trade tariffs and raw material risks. Goldman Sachs forecasts a slowdown in Croda’s organic sales growth and a 6% decline in adjusted EBIT for the financial year 2025. Meanwhile, Jefferies analyst Charlie Bentley maintained a Buy rating on Croda, though he adjusted the price target from GBP50.00 to GBP46.00. Bentley expects Croda to report first-quarter revenues slightly below consensus estimates but sees potential for significant earnings improvement. The analyst also noted that Croda’s valuation multiples are at multi-year lows, indicating the stock might be undervalued. These developments reflect differing perspectives on Croda’s financial outlook and market position.
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