Broker snap: UBS ups forecasts for Elementis

After having upped its forecasts for Elementis in 2012, UBS has raised its target price for the stock from 185p to 200p and reiterated its buy recommendation.UBS says that the chemicals group's 2011 results were in line with expectations, despite fourth quarter restocking which negatively affected sales. The broker highlights the Chromium division which showed reported particularly strong margins mainly due to $5m of plant cost savings. Forecasts for 2012 earnings per share have been lifted by 9% to 22.1 cents."Trading in 2012 has started well and management are confident of making further progress during the year. Elementis is now in a net cash position ($26.2m), thanks to continued strong cash generation and the EU Commission repeal of $34m received in August. Management are keen to reinvest back into the business (via bolt ons in Spec chems) before giving additional returns to shareholders," UBS said.The new price target of 200p is based on discounted cash flow and shares are currently trading at 11.5 times 2012 expected earnings, the broker says.BC Elementis