On Monday, UBS reiterated its Buy rating on Croda International (LON:CRDA:LN) (OTC: COIHY), with a steady price target of £51.00. The firm anticipates that Croda will surpass market expectations in its upcoming earnings report. Currently trading near its 52-week low at $20.87, the specialty chemicals company maintains strong fundamentals with a gross margin of 43.86% and an overall GOOD financial health rating according to InvestingPro.
Croda is set to disclose its fourth quarter and second half of 2024 financial results on February 25, 2024. The UBS analyst projects that Croda will report a pre-tax profit (PBT) of £131 million for the second half of the year, which is roughly 2% higher than the consensus estimate.
The forecasted results are seen as a potential positive trigger for Croda's stock, as the predicted figures suggest a halt to the trend of earnings downgrades. With a track record of maintaining dividend payments for 33 consecutive years and a current P/E ratio of 28.5x, Croda demonstrates consistent shareholder returns.
The analyst expects the company's fourth-quarter sales to reach £438 million, approximately 4% above the consensus of £421 million. The second half of 2024 is expected to bring an adjusted operating profit of £143 million for Croda, aligning closely with the consensus estimate of £142 million. Discover more valuable insights and 6 additional ProTips with InvestingPro.
UBS's sales estimate for the fourth quarter has been adjusted slightly upward from £434 million, primarily due to a less significant impact from foreign exchange headwinds than previously anticipated. Additionally, the analyst forecasts Croda to achieve 5.3% organic sales growth (OSG) for the fourth quarter, surpassing the consensus estimate of 4.8%.
This growth is attributed to a 5.3% increase in volume, coupled with stable pricing. The company's strong financial position is reflected in its current ratio of 2.72, indicating ample liquidity to meet short-term obligations.
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