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Canaccord ups price target on Synthomer

By Iain Gilbert

Date: Monday 02 Aug 2021

Canaccord ups price target on Synthomer

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on chemicals outfit Synthomer from 700.0p to 750.0p on Monday, citing a fourth upgrade to full-year guidance.
Synthomer announced a further update to its guidance for 2021 underlying earnings in July, EBITDA, now to "above £500.0m" from previous estimates of over £450.0m.

The Canadian bank pointed out that the source of the further upgrade appeared to be broad-based.

"Overall, we now expect net EPS to be up more than 150% this year on unit margins (€/ton) roughly doubling, with the overwhelming majority of that improvement coming from the nitrile business," said Canaccord.

"Whilst normalisation is likely to come in the medium term, we continue to see super-normal profits in nitrile through 2022E, due both to the direct and ongoing impacts of the pandemic on PPE demand, but also the indirect increase in healthcare workers' (and others') demand for greater protection."

As a result, Canaccord, which also stood by its 'buy' rating on the stock, upgraded 2022/23 EPS estimates by roughly 8% but also highlighted "increased optionality" at Synthomer, whether from the rapid debt reduction or opportunity for further expansion.

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