Berenberg analyst upgrades Synthomer to ‘buy’ rating

Hamburg, Germany – Berenberg financial analysts have issued a ‘buy’ rating on Synthomer, increasing the 'target price' for the UK polymers maker's stock from 115.0p to 400.0p.

Synthomer share values have been hit by “cyclical headwinds,” the German bank noting a 90% fall from peaks driven by surging demand for latex gloves amid the Covid pandemic.

Berenberg's 6 Oct analysis followed a recent capital restructuring move by Synthomer to reduce leverage from 5.5 to 3.8 times earnings. (ERJ report)

“The fully-underwritten £276m (€320 million) rights issue unveiled on 7 Sept has taken the sting out of the worst-case scenario,” commented Sebastian Bray of Berenberg.

"While early to upgrade the attractions of the yield on a de-risked balance sheet are plain to see,” according to the financial firm's analyst.

And while trading remains challenging, the nitrile latex market “may be showing signs of shake-out,” continued Bray.

This, he explained, is reflected by the fact that the “precipitous decline” in nitrile prices appears to have run its course.