In a note on Wednesday, the broker upped its target for the chemicals firm to 9,400p from 7,800p and retained their ‘buy’ rating, saying the growth of the mRNA market is “clear, as is Croda’s leading position” while also flagging comments from Ugur Sahin, the co-founder of BioNTech who developed an mRNA COVID-19 vaccine alongside Pfizer (NYSE:PFE) Inc, that “a third of all newly approved medications could be based on mRNA in 15 years’ time”.
“Shares are likely to go through a period of consolidation as the market weighs the potential for any post- 2022 decline in the close to US$200mln [per year] sales of lipids to COVID-19 vaccines against the wider, although longer-term, opportunities in mRNA therapies and other vaccines”, Berenberg said.
The broker also said that Croda’s interim results on Tuesday had given the impression of a “full-blooded recovery” at the firm and that the robustness of the group’s performance tech business “bodes well for any divestment”, estimating Croda could receive GBP1bn for selling 75% of the segment.
The assessment followed results for the six months to June 30 yesterday when Croda reported a 42% rise in operating profit to GBP218.5mln, a record performance that was boosted by demand for ingredients connected to COVID-19 treatments and vaccines.
Shares in the firm were up 0.8% at 8,332p in late afternoon trading.