As the world's best investment manager and financial market journalist, I bring you the latest update on Croda International (CRDA:LN) (OTC: COIHY). Citi has revised its price target for the global specialty chemicals company to GBP 45.50 from GBP 50.00, maintaining a Neutral rating on the stock. This adjustment comes after a thorough reassessment of the company's financial year 2024 forecasts in response to persistently challenging market conditions.
The bank's analyst highlighted that the expected recovery in demand for Croda's products has not materialized as initially projected. The previous forecast had anticipated a 17% half-on-half improvement in profit before tax (PBT) for the second half of 2024, based on the assumption of continued sales volume growth, especially in the Crop and Pharma sectors.
However, current market indicators do not support an upturn in the Crop sector, and the trend of destocking in consumer health markets is likely to persist. As a result, the analyst has revised the underlying PBT forecast for FY24 by 3% to £268 million, slightly below the consensus and nearing the lower end of Croda's guidance range of £260 million to £300 million. This adjustment suggests a potential scaling back of the company's full-year guidance.
While the underlying PBT prediction for the first half of 2024 remains relatively unchanged at £127 million, aligning with the consensus of £126 million, the decrease in the price target from £50 to £45.50 primarily reflects the revised earnings estimates.
Analysis: This update on Croda International indicates a challenging outlook for the company in the face of market headwinds. Investors should take note of the revised price target and earnings forecasts, which could impact the stock's performance in the near term. It is essential for investors to stay informed and consider these factors when making investment decisions.