Johnson Matthey H1 in Line but Health Outlook Weaker; Capital Expenditures Higher Than Expected

Narrow-moat Johnson Matthey news flow continues to be busy. Overall, first-half performance was broadly in line with consensus expectations as underlying operating profit doubled compared with the prior-year period that was heavily affected by coronavirus shutdowns. Shares are down 1%-2% intraday. However, the outlook for the health segment has deteriorated, which will likely have an impact on the potential sale price of the business and capital intensity excluding eLNO is higher than our expectations. Altogether, we expect to lower our GBX 2,650 fair value estimate by a single-digit percentage.