Weak Platinum Demand Doesn't Hurt JM's Valuation

The heavy-duty truck market should drive growth in Johnson Matthey's auto catalyst business, says Morningstar's Jeffrey Stafford

Jeffrey Stafford, CFA 7 October, 2011 | 10:35AM
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Johnson Matthey (JMAT) is a rather diverse specialty chemical company, but essentially the firm is in the platinum business. JM is a leading refiner, marketer, and distributor of the rare metal and its close relatives, known collectively as platinum group metals or PGMs. Additionally, Johnson Matthey manufactures a variety of products that include PGMs as a critical component, including automotive catalysts and active pharmaceutical ingredients. We think the company will benefit from several global trends, including regulation to curb emissions and the growth of prescription drug use in the developing world. However, the penetration of electric vehicles is a potential threat further down the road.

With platinum prices (and demand) declining recently, we have toned down our near-term expectations for the firm's Precious Metals Products division. However, this change was not enough to move the needle on our valuation.

Read the full Morningstar Research Report on Johnson Matthey, including our fair value estimate, by clicking here. Morningstar Research on stocks, funds and ETFs is a feature of Morningstar.co.uk Premium.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Johnson Matthey PLC1,491.00 GBX-0.27

About Author

Jeffrey Stafford, CFA  Jeffrey Stafford, CFA, is an equity analyst for Morningstar, covering agriculture and chemical companies.

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