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(Sharecast News) - Berenberg has raised its target price on Croda to £44.00 from £36.00, arguing that the key risks to the speciality chemicals group's post-pandemic recovery are continuing to recede following its latest trading update.
The broker said Croda's third-quarter results reinforced its increasingly positive view on the investment case, with both concerns about weak end-market demand and the company's ability to repair past execution issues becoming less pronounced.
Berenberg highlighted particularly strong momentum in Consumer Care, where organic sales growth was supported by a favourable mix, including a 19% increase in high-margin Beauty Actives sales. While it does not expect that level of growth to be sustained, the broker said it is becoming more confident that Consumer Care can deliver mid-single-digit annual growth over the longer term.
The analysts also pointed to improving prospects in Life Sciences, where growth in pharmaceutical ingredients, excipients and vaccine-related products helped offset ongoing weakness in Crop Protection. Berenberg believes Croda's healthcare portfolio could become a significant driver of margin expansion over the next two to three years, with a recovery in RNA-related markets expected to provide an additional tailwind from 2028.
Reflecting stronger margin assumptions in Consumer Care and the potential for future share buybacks, Berenberg lifted its earnings forecasts through 2028.
The broker added that Croda's valuation remains attractive, with the shares trading below historical averages despite its expectation of double-digit annual earnings growth over the coming years.
Canaccord Genuity has slashed its target price on eEnergy to 0.9p from 9.0p, reflecting the sharp increase in the company's share count following its recent fundraising, while reiterating its 'buy' recommendation on the stock.
The Canadian bank said the AIM-listed energy services group's October placing, which raised £8.3m through the issue of 2.76bn shares at 0.3p each, had materially altered the capital structure and prompted a reassessment of its valuation methodology.
However, Canaccord argued that the fundraising had significantly strengthened eEnergy's balance sheet and addressed a number of legacy issues, including delayed receivables linked to the Mace Solar programme and elevated creditor balances.
The broker now expects the company to end the current year in a net cash position and fully repay £2.5m of short-term debt during 2027.
Canaccord also pointed to strong trading momentum, noting that management expects revenues of at least £25m and adjusted underlying earnings of no less than £2.5m in 2027. It added that those forecasts do not include potential contract wins from two Department for Education tenders worth up to £8m each, leaving scope for future upgrades.
The analysts said recent operational changes under chief executive John Gahan should support lower overheads, improved margins and what it expects to be the company's first year of positive free cash generation in 2027.
Reporting by Iain Gilbert at Sharecast.com