Shares of Croda International rose more than 2% after Goldman Sachs issued a double upgrade, taking its recommendation on the U.K. specialty chemicals group from "sell" to "buy" and increasing its 12-month price target to 3,200p from 2,800p. Goldman said the new target implies about 25.3% upside relative to the stock's close at 2,554p on Friday.
The decision represents a reversal from the position Goldman took on April 11, 2025, when the bank placed Croda on its Sell list at a share price of 2,632p. Since that call, Croda shares have underperformed the FTSE World Europe index, falling roughly 4% while the index gained about 20%.
Goldman flagged two principal drivers for the upgrade - pricing and volume-led margin recovery. The bank now models nearly 10% pricing growth in the Consumer Care division for fiscal 2026, up from a previous assumption of -0.5%. Goldman highlighted upside risk to ethylene oxide - which accounts for about 20% of Croda's raw material basket - arising from shipping and fertilizer disruption linked to conflict in the Middle East.
On a reported basis, group sales for fiscal 2025 grew 7% in constant currency. Goldman noted Consumer Care and Life Sciences each rose 8%, while Fragrance & Flavours recorded a 15% increase. In its analysis Goldman said: "The breadth and magnitude of the recovery were not in our base case."
Following the reassessment, Goldman raised its adjusted EBIT estimate for FY26 by 13% to £341 million and for FY27 by 14% to £367 million. The bank's earnings per share forecasts are now 175.44p for FY26, 190.33p for FY27 and 200.44p for FY28. It also lifted adjusted EBIT margin forecasts by 110 basis points for FY26, 115 basis points for FY27 and 190 basis points for FY28, while suggesting management's target of greater-than-20% margins by 2028 looks increasingly achievable.
Goldman values Croda using a two-stage discounted cash flow model with a weighted average cost of capital of 8.1% and a terminal growth rate of 2.7% to derive the 3,200p target.
At 06:57 ET (10:57 GMT) on Monday the shares were quoted at 2,620p. That level remains far below Croda's December 2021 record high of 10,410p - roughly 75% lower - and only marginally above the multi-year low of 2,439p recorded on September 4, 2025. The stock last traded above 5,000p in March 2024 and above 4,000p in October 2024, and it briefly crossed 3,000p on February 27, 2026 before pulling back.
Goldman also highlighted valuation and balance-sheet metrics in support of the upgrade. The bank's FY26 EPS estimate places Croda at 14.6 times forward earnings, about a 25% discount to its 10-year average forward P/E of roughly 20 times. Net debt to EBITDA was 1.0x for FY2025 under Goldman's calculations and is projected to fall to 0.3x by FY2028. The FY2026 dividend yield is forecast at 4.3%, with dividend per share assumed flat at 111.00p.
Key points
- Goldman Sachs upgraded Croda from "sell" to "buy" and raised the 12-month price target to 3,200p, implying about 25.3% upside from the prior close.
- Drivers of the upgrade are forecast pricing gains in Consumer Care and volume-led margin recovery, with Goldman now assuming nearly 10% pricing growth in Consumer Care for FY2026.
- Sectors impacted include specialty chemicals, consumer care, life sciences, fragrance and flavours, and broader beauty markets, given Croda's exposure to those end markets.
Risks and uncertainties
- Value-destroying mergers and acquisitions activity represents a risk identified by Goldman and could harm shareholder value if executed poorly - this affects corporate and financial markets tied to the chemicals sector.
- Appreciation of the British pound versus the dollar, euro and yuan is a cited risk, with roughly 80% of Croda's revenues generated outside the U.K., exposing the company to currency impacts on reported results.
- Customer destocking in beauty markets poses downside to demand and could impact near-term sales and margins in Consumer Care and related divisions.
Goldman's revised outlook is predicated on improved pricing and volumes supporting margin expansion. The bank's forecasts lift adjusted EBIT and EPS estimates for the next several fiscal years and suggest the company could approach management's margin target by 2028, while balance-sheet metrics are expected to strengthen through falling net debt to EBITDA. Investors will likely weigh those projections against the risks Goldman highlights, including currency moves, M&A execution and potential destocking in key end markets.