This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
17 December 2015
Investors in specialty chemicals focused Elementis (ELM) are failing to benefit from the Fed-hike led global rally, dropping back below the key 230p level after a disappointingly bearish full-year pre-close trading statement containing explicit reference to challenging markets, continued currency headwinds and unfortunate need to reduce EPS guidance. Management’s backtracking on what it said only end-October (EPS in-line with market expectations) shows how things have further deteriorated in just six weeks and adds to pre-existing concerns about global growth, notably the US and China. Even if it expects progress in 2016, its suggestion that 2015 EPS will now be at the lower end of consensus due to exports/sales from North America remaining hindered by a strong USD risks seeing 2016+ forecasts cut further if markets start to believe and price in the FOMC’s projection of a significant four further hikes in 2016 which could send the USD back to recent highs. Non-recurrence of flattering one-off benefits to profits are also seen denting profits growth next year keeping a lid on optimism. With the shares having spent 3 years around 250p, all eyes on support lows of 210p to hold up the gradual turn down of the last 6 months.
Mike van Dulken, Head of Research
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
Comments are closed.