Berenberg lowers target price on Synthomer

(Sharecast News) - Analysts at Berenberg lowered their target price on chemicals firm Synthomer from 80p to 60p on Friday, stating weak demand continues to weigh on "the slice of equity value" left in the stock. Berenberg said Synthomer's qualitative third-quarter trading update "held few surprises" in this respect, with the stock's 23% share price decline over the past month suggesting market anticipation of the trim in full-year continuing operations FY25 underlying earnings guidance from slight growth versus the 2024 level of £143m.

The German bank noted that demand for and pricing of industrial chemicals has been weak in September and October, with the second half EBITDA deceleration implied by Synthomer's new guidance of £65m, leaving earnings growth "potentially challenging" in 2026, notwithstanding £25m of cost savings and usual seasonality.

Berenberg, which reiterated its 'hold' rating on the stock, said the roughly 5%/8%/10% reductions to its EBITDA forecasts for 2025/26/27 primarily reflected weaker net prices and volumes across the business, especially in coatings, energy and nitrile latex.

"Synthomer trades at the lower end of the diversified chemicals sector, at 4.4x 2026 EV/EBITDA; we believe this is a fair reflection of the risks associated with its elevated leverage. Please note: our year-end leverage calculations exclude receivables factoring, which would add GBP114m as at H1 2025," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com