Kepler Cheuvreux has restarted coverage of Johnson Matthey and assigned a "buy" rating with a target share price of 2,450p. The brokerage's note emphasizes the firm's leading role in the gasoline-hybrid segment and points to an acquisition intended to broaden its exposure to stationary emissions control.
The research house says the market is not fully valuing Johnson Matthey's position in gasoline-hybrid systems. Kepler Cheuvreux notes the company has secured nine new platforms that collectively represent 25% of the European hybrid market, a footprint the broker describes as a key competitive advantage.
"Johnson Matthey is the purest catalyst play available in a market that continues to grow," the note states.
Kepler Cheuvreux also highlights Johnson Matthey's planned purchase of Cormetech for an enterprise value of $360 million, which it values at 10.3 times 2026 EBITDA. The brokerage expects this acquisition to accelerate growth in stationary emissions control markets, explicitly including the data centre sector where gas-fired backup generators produce carbon emissions.
The broker set out multi-year financial projections. For the 2026-27 year Kepler Cheuvreux forecasts EBITDA of GBP558 million and sales of GBP2.80 billion, a 2026-27 EBITDA figure it says sits about 1% below current consensus. For 2027-28 the brokerage projects EBITDA of GBP597 million on sales of GBP2.89 billion, a figure it notes is marginally above consensus.
These forward estimates compare to reported 2025-26 results of EBITDA at GBP485 million and sales of GBP2.56 billion. On the profit and per-share metrics, Kepler Cheuvreux anticipates adjusted EBIT of GBP423 million for 2026-27 and GBP457.7 million for 2027-28, versus GBP340 million in 2025-26.
Adjusted net profit is forecast at GBP250.7 million and GBP270.6 million for 2026-27 and 2027-28 respectively. The brokerage's per-share forecasts show adjusted, fully diluted EPS at 148.33p for 2026-27 and 160.11p for 2027-28, up from 127.81p in 2025-26. By contrast, consensus EPS is cited at 154.02p and 171.67p for the two future periods.
Kepler Cheuvreux reports Johnson Matthey's net financial debt stood at GBP806 million for 2025-26. The broker projects a swing to net cash of GBP73.9 million in 2026-27 before a return to net debt of GBP188 million in 2027-28. Free cash flow is forecast at GBP282.8 million for 2026-27 and GBP463.7 million for 2027-28, compared with reported free cash flow of GBP401 million in 2025-26.
For valuation the brokerage applied a multi-stage discounted cash flow model. Key assumptions include a beta of 1, a terminal growth rate of 3% and a weighted average cost of capital of 10.1% for 2026, rising gradually to 11% by 2035.
Johnson Matthey's shares have declined 5.6% year-to-date and have traded in a 52-week range between 1,688p and 2,388p. The company carries a market capitalisation of GBP3.4 billion and a free float of 100%.
Key points
- Kepler Cheuvreux reinstated coverage with a "buy" rating and a 2,450p target, arguing the market underestimates Johnson Matthey's gasoline-hybrid position.
- The firm has won nine new platforms representing 25% of the European hybrid market, reinforcing its catalyst market exposure in automotive.
- The planned acquisition of Cormetech for an enterprise value of $360 million (10.3 times 2026 EBITDA) is expected to broaden growth into stationary emissions control, including demand linked to data centre backup generators.
Risks and uncertainties
- Forecast sensitivity to hybrid market dynamics: Kepler Cheuvreux's bullish case relies on Johnson Matthey's stated share of the gasoline-hybrid market, which the broker says is currently underappreciated by investors.
- Acquisition integration and benefits: the planned Cormetech purchase is presented as a growth driver for stationary emissions control, creating uncertainty tied to deal execution and the realisation of anticipated benefits.
- Balance sheet and cash flow swings: projections show a movement from reported net debt to net cash and back to net debt across the forecast window, indicating volatility in financing position and free cash flow timing.
This analysis presents Kepler Cheuvreux's view and modelling assumptions, including explicit consensus comparisons and detailed forecast figures for EBITDA, sales, adjusted EBIT, adjusted net profit and per-share earnings across 2026-27 and 2027-28. The note also summarises valuation inputs used in the broker's discounted cash flow framework.