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magazineBreak up reports lift Johnson Matthey
Johnson Matthey (JMAT) £32.62
Gain to date: 6.4%
Original entry point: Buy at £30.66, 21 December 2017
Speculation that an activist investor is building a stake in chemicals business Johnson Matthey (JMAT) has revived talk of a break-up of the business and helped drive the shares higher.
The argument is that Matthey should split its prized vehicle batteries arm from the pressured exhausts catalyst division. While the former is seen as a beneficiary of a switch to electrical vehicles, the latter is seen as a victim of this trend.
When we flagged the stock as one of our picks for 2018 we argued that sentiment towards the catalyst business was overly weak, pointing to forecasts from investment bank Morgan Stanley which suggested it could continue to grow for at least another decade.
However, we also recognised that the real excitement is generated by its battery technology. In a nutshell it requires less cobalt than other solutions, which is a major plus point given pressures on supply of that material.
The company may address the clamour for a corporate shake up when it announces its results for the year to 31 March 2018 on 31 May.
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