Croda Results Broadly in Line but the Market Continues to Sell Anyway; Shares Overvalued

Narrow-moat Croda reported 2021 EBIT of GBP 469 million, up 54% versus 2020 but in line with consensus and our forecast. Guidance for 2022 was typically nonspecific, indicating growth should be in line with medium-term expectations, margins should remain strong, and lipid system sales (for coronavirus vaccines) should be at a similar level to 2021 ($200 million). This seems to align with current consensus expectations for 5%-6% growth in sales and EBIT in 2022, yet the stock is trading down 5% intraday. Regardless, we don’t expect to make a material change to our forecast or GBX 5,150 fair value estimate. Consequently, shares continue to look overvalued.