Broker snap: UBS ups target for Cookson but stays cautious

Date: Tuesday 28 Feb 2012

UBS has raised its target price for materials science firm Cookson from 650p to 675p after a better-than-expected finish to the year.

"While Cookson’s profits were ‘slightly’ lower in H2 compared to H1, the results showed that cyclical fears were mostly unfounded and the business seems to have performed well in Nov/Dec," the broker said.

Adjusted earnings per share came in 3% ahead of UBS's expectations with forecasts being beaten in Engineered Ceramics and continued new product benefits in Performance Materials.

Due to this outperformance, the broker has raised its estimates by 6% for the current year, hence the target price lift.

However, the broker maintained its neutral rating on the stock today, saying that growth could still be relatively disappointing in 2012, with Cookson's expectations ahead of its own.

"UBS is now bearish on the steel cycle (tough trends in China/Europe). Foundry might also slow as high Europe & truck exposure weighs. Fused Silica should get no worse and help profits in H2 though. Performance Materials sales are likely to face new product headwinds and our own data points to underlying PCB end-market weakness but it should see mix-driven profit growth."

BC

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