Berenberg Bank Reiterates Johnson Matthey (JMPLF) Hold Recommendation

Berenberg Bank reiterated coverage of Johnson Matthey (JMPLF) with a Hold on Nov. 25, 2025, while the consensus one‑year price target (as of Sep. 25, 2024) is $26.57 — implying ~20.77% upside from a $22.00 close (range $21.53–$32.55). The report cites projected annual revenue of $5,093 million (down 56.54%) and projected non‑GAAP EPS of 2.22. Institutional positioning is mixed: 129 funds hold the name (down 4 funds q/q), total institutional shares fell 13.12% to 17,247K, but average fund portfolio weight rose to 0.31% (up 14.30%), with several large passive/ETF holders slightly increasing allocations.

Analysis

Market structure: The headline (Berenberg Hold, avg PT $26.57 vs $22) and the huge projected revenue drop (‑56.5% to $5.09bn) indicate the market is pricing a near‑term restructuring/portfolio re‑classification rather than a pure demand collapse. Direct beneficiaries: battery/chemical businesses that win incremental capital and niche PGM recyclers if JM sheds legacy catalyst volumes; losers: ICE-focused catalytic converters and suppliers if autocatalyst volumes structurally decline. Commodities (palladium/platinum) are a transmission channel — weaker ICE demand would depress PGM prices and weigh on PGM miners and related credit spreads in 3–12 months.

Risk assessment: Tail risks include a larger‑than‑expected write‑down (earnings shock), sudden PGM price swings (±20% moves within 6 months), or accelerated EV regulation that erodes legacy revenue permanently. Near term (days–weeks) expect muted flow; short term (1–6 months) watch institutional selling (already ‑13% shares) which can amplify volatility; long term (12–36 months) execution on new tech (hydrogen/battery) determines value. Hidden dependencies: on‑balance PGM inventory and pension liabilities can swing reported EPS; contracts with auto OEMs are lumpy and seasonally timed.

Trade implications: Prefer asymmetric, size‑managed exposure — the 20.8% consensus upside vs materially lower revenue suggests idiosyncratic mispricing risk. Direct plays: small core long (2–3% net) in JMAT.L (prefer LSE liquidity) with explicit stop and defined‑risk option structures; if options unavailable, use OTC equity but tighten sizing. Rotate away from pure ICE parts suppliers and into selective battery materials names (e.g., UMICY/UMICY OTC exposure) if evidence of structural EV acceleration appears.

Key Decisions for Investors

• Establish a 2–3% long position in Johnson Matthey via JMAT.L (prefer LSE liquidity) at market, target £0.20–£0.25 (≈20% upside from current US OTC parity) within 9–12 months; hard stop at a 18% drawdown (close if price < $18) or reduce to 0.5% if institutional holdings decline another 10% in a quarter.
• If liquid options on JMAT.L exist, buy a 9–12 month call spread sized 0.5–1.0% notional (example: 25/30 strikes or nearest strikes) to cap downside and express the 12‑month $26.5 target; otherwise sell 3–6 month 30–40% OTM covered calls on existing position to generate ~2–4% annualized yield.
• Pair trade: Long JMAT.L (1.5%) vs short UMICY/Umicore (1.0%) for 6–12 months to isolate company‑specific recovery vs broader battery/cathode secular exposure; rebalance if PGM prices move ±15% or JM issues clear 12‑month growth guidance.
• Implement event triggers: buy protective 3‑month puts (size 0.5–1%) if JMPLF/JMAT price breaches $20 or institutional share count falls >5% QoQ; take profits and re‑assess if management publishes a clear roadmap or there is a confirmed material OEM contract within 90 days.