We’re currently experiencing extremely high call volumes. We’re very sorry for any inconvenience this might cause.

If you need help with your account, please visit our Help Centre, or email us and we’ll get back to you as soon as we can. For more information and tips on managing your account online please visit www.hl.co.uk/coronavirus

We’re experiencing high call volumes, please check FAQs before calling.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Bodycote could do well in 2021 recovery, JP Morgan says

Wed 25 March 2020 14:28 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Bodycote is in a position to do well in a recovery from the Covid-19 crisis, JP Morgan said as it upgraded the company's shares to 'neutral'.

The coronavirus pandemic has created a weaker backdrop for capital goods companies and forecasts will need to be reassessed as the picture becomes clearer, JP Morgan analysts said.

For Bodycote, exposure to automotive, aerospace and broader macro demand will shrink volumes and earnings in 2020, the analysts said. This has led to the company's shares underperforming the market so far in 2020.

Analysts Andrew Wilson and William Ashman forecast a 47% earnings decline for 2020 and higher operational leverage. Downside risks remain for Bodycote, which produces heat treatment and thermal processes, depending on the next few months, they added.

"However, the stock has leverage to any recovery in 2021 and a balance sheet that is currently net cash," the analysts wrote in a note to clients. "Given the share price underperformance, we see a more balanced risk/reward and upgrade to neutral."

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.