Bitcoin price today: gains to $120k, near record high on U.S. regulatory cheer
Investing.com -- Elementis shares fell after J.P. Morgan downgraded the stock to “neutral” from “overweight,” saying the chemicals maker’s recent balance sheet and portfolio improvements had already been reflected in its price, despite the company setting new midterm growth and return targets, in a note dated Monday.
The brokerage noted that its earlier bullish stance, driven by deleveraging, a portfolio shift toward higher quality earnings, and efficiency gains, had largely materialized.
This has been reflected in Elementis shares rising 13% over the past year and 48% over two years, outperforming the European chemicals sector, which declined 3% and 2% respectively in the same periods.
The company has introduced updated midterm financial targets, aiming for an adjusted EBIT margin above 23% by the medium term, compared with the 2027 consensus of 21.2%.
It is also targeting mid-single-digit percentage revenue growth through the cycle, operating cash conversion above 90% over three years, and a return on capital employed excluding goodwill of over 30%.
Plans include increasing research and development spending from about 2% to 3% of sales, maintaining capital expenditure at 3-4% of sales, keeping net debt to EBITDA near 1x, and continuing a dividend payout ratio of roughly 30% of adjusted net profit. The company has already initiated a $50 million share buyback.
For 2025, Elementis expects adjusted EBIT of about $124 million, in line with market expectations, and $12 million in gross cost savings, with an additional $10 million in savings planned by 2026.
J.P. Morgan’s revised forecasts, adjusted for the sale of the Talc business, the ongoing buyback, currency movements, and the new financial targets, project adjusted EBIT of $124 million in 2025, $135 million in 2026, and $147 million in 2027.
Free cash flow conversion is expected at 40%-55% between 2025 and 2027, with net debt to EBITDA falling from 0.9x in 2025 to 0.4x in 2027.
While J.P. Morgan sees potential for 2027 adjusted EPS of 16.9 cents, 5% above its new estimate and 7% above pre-results company consensus, it emphasized that this depends on the company delivering faster organic growth.
Valuation was described as expensive, with 2025 and 2026 EV/EBITDA multiples of 10x and 9x, respectively, similar to Croda (LON:CRDA) and well above the sector median.
The brokerage maintained its December 2026 price target of 186p, based on a 2027 P/E of about 15x, in line with the company’s 10-year median.