Summary
Deutsche Bank has reduced its price target for Johnson Matthey PLC to GBP21.20 from GBP24.00 but retained a Buy rating on the shares. The bank recalibrated its financial model after the announced renegotiation of terms for the sale of Johnson Matthey's Catalyst Technologies unit to Honeywell, which lowered the enterprise value of the transaction. Despite the adjustment, InvestingPro data cited in recent coverage indicates the company continues to show a strong free cash flow yield and, according to that analysis, remains undervalued at current market levels.
Deal terms and proceeds
The revised agreement reduced the enterprise value tied to the Catalyst Technologies sale by 26%, to £1.325 billion from the previously agreed £1.8 billion. Deutsche Bank now expects net proceeds from the deal of around £1,155 million, down from the earlier expectation of £1.6 billion. That decrease in net proceeds is equivalent to roughly £2.64 per Johnson Matthey share.
Valuation and cash flow
The bank's update follows a week in which the stock fell about 15%. Despite that share-price weakness, InvestingPro data referenced in the coverage shows Johnson Matthey retains an approximately 8% free cash flow yield. Deutsche Bank's model adjustments reflect both the lower expected proceeds from the Honeywell transaction and the firm's ongoing forecasts for operating performance.
Earnings outlook and segment notes
Deutsche Bank projects EBIT of £339 million for fiscal 2026, which it says is slightly above consensus, and £367 million for fiscal 2027, about 2% ahead of consensus. For fiscal 2027 the bank expects:
- Clean Air - marginal year-over-year improvement in margins;
- PGMs - a slight decline in performance owing to dual running costs and existing PGM hedging, despite higher PGM prices;
- Hydrogen Technologies - a reduction in losses compared with prior periods.
Deutsche Bank analyst Tristan Lamotte maintained the Buy rating after the model revisions.
Other broker actions
Separately, JPMorgan moved its rating on Johnson Matthey from Neutral to Overweight and lifted its price target to GBP22.50 from GBP18.60. The bank also raised its adjusted EBIT estimates for Johnson Matthey’s continuing operations by 11% for fiscal 2026 and by 6% for each of fiscal 2027 and 2028. JPMorgan noted that these updated projections sit slightly above the current consensus and attributed the more positive outlook to its assessment of metal prices.
Market context
The combination of a reduced transaction value for the Catalyst Technologies sale and differing broker forecasts has produced a mixed outlook: Deutsche Bank trimmed valuation metrics while maintaining a Buy stance, and JPMorgan upgraded the stock alongside upward revisions to its earnings forecasts.