Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - JPMorgan downgraded Elementis Plc (LON:ELM) (OTC:ELMTY) from Overweight to Neutral on Monday, setting a price target of GBP1.86.
The investment bank cited the substantial outperformance of Elementis shares, which have risen 13% over the past year compared to a 3% sector decline, and gained 48% over the past two years while the sector fell 2% in GBP terms.
JPMorgan noted that its previous bullish thesis—centered on balance sheet deleveraging, portfolio improvements, enhanced earnings quality, and cost-cutting measures—has largely materialized, reflected in the stock’s current valuation multiples of 10x/9x EV/EBITDA and 19x/16x P/E for 2025/26.
While JPMorgan sees potential for 2027 adjusted EPS of USD 16.9 cents, which would exceed both its own estimates and company consensus by 5-7%, the bank expressed caution about Elementis’ new mid-term plan, which relies heavily on organic growth acceleration.
The investment firm continues to view Elementis as a potential acquisition target due to its history of takeover offers in 2020/21 and its improved portfolio, but noted that likely takeout multiples of 11-12x EBITDA no longer offer "outsized upside potential" for shareholders.
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