Elementis: Operational Outperformance and Undervalued Financial Quality Support Buy Rating

Jefferies analyst Vanessa Jeffriess has reiterated their bullish stance on ELM stock, giving a Buy rating on January 16.

Vanessa Jeffriess has given his Buy rating due to a combination of factors that underline Elementis’s improving outlook and attractive positioning. She highlights that management now expects EBIT to come in ahead of consensus for FY25, which is unusual in the current chemicals environment and signals operational outperformance. In particular, she notes that the Personal Care division is regaining momentum, with margins projected to exceed 30% next year, laying a foundation for a more convincing growth narrative into FY26, even as the more challenging Coatings segment is being actively mitigated through internal efficiency and self-help measures.

Jeffriess also points out that while net debt is modestly higher, this is largely explained by the share buyback, investment in working capital to support growth, and currency headwinds, and she still views the balance sheet as robust with room for another repurchase program. She argues that the operational progress achieved since the change in management has been significant, particularly given weak end markets, and that Elementis now stands out versus UK industrial peers on financial quality and metrics. In her view, this differentiated financial profile is not adequately captured in the current share price, creating a valuation gap that supports maintaining a Buy recommendation on GB:ELM.

In another report released on January 16, UBS also reiterated a Buy rating on the stock with a p190.00 price target.