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.
We're raising our fair value estimate for Johnson Matthey to account for slightly stronger-than-anticipated half-year results and the impact of the time value of money since our last update. We forecast average annual growth in the double digits for the company's revenue excluding precious metal sales over the next five years, driven mainly by strength in the firm's emission control business.
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