Broker snap: Credit Suisse upgrades Johnson Matthey to 'outperform'

Shares in chemicals group Johnson Matthey rebounded on Thursday morning following a sharp fall the day before, with Credit Suisse providing a lift after upgrading its rating for the stock from 'neutral' to 'outperform'.The stock dropped 5.8% on Wednesday after the company reported a 6% fall in first-half pre-tax profits and said that the performance in the second half will be similar to the first.Credit Suisse said that it recognised some negatives in the statement with low volumes seen in autos and metals, but thinks that the guidance for the second half is "conservative". The broker forecasts a second-half adjusted pre-tax profit some 5% higher than the first half due to seasonality and some improvement in platinum group metals prices."We think the short-term negatives have now been flagged and are in the share price. Mid-term, we forecast good growth, and believe the shares are at a reasonable price."The shares are trading at 13.1 times full-year earnings, which represents a 19% discount to peer Umicore and an 18% discount to its long-term average of a price-to-earnings multiple of 15.5.The target price for the shares has been lifted from 2,300p to 2,400p.The stock was up 2.69% at 2,249p in mid-morning trade.BC