Growth is "exhausted" at Johnson Matthey, says Exane BNP Paribas

Exane BNP Paribas sees lower medium-term structural growth and growing risks at Johnson Matthey, as it lowered its stance on the chemicals outfit from 'outperform' to 'neutral'.The broker, which cut its target price by 7% to 3,300p, said that growth was "exhausted" at the company, which specialises in emission control, metal refining and industrial technologies markets.After operating profits grew at a compound annual growth rate of 9% over the last 10 years, Exane said it expects this to fall to 5% for the next decade.As Johnson Matthey's growth engine switches from autocatalysts to battery materials, the broker highlighted key risks to this change, including more technologically-advanced peers in the sector, incoming new entrants to the market, and limited margin potential.As for the autocatalysts division, Exane said so-called "diesel-bashing" is hurting demand for diesel vehicles sooner than previously expected.Despite the ratings downgrade, the broker said that downside is limited from current levels by the stock's underperformance so far this year. The shares now trade at a 6% discount to the sector on a 2015 calendar price-to-earnings basis, compared to a 10-year average 17% premium.