Source: Sharecast
The bank flagged a number of reasons for its "bullish view".
It said: "The earnings downgrade cycle is largely behind us, with consensus estimates likely to remain stable even as much of the sector faces further cuts; improved execution in OSG delivery, operating leverage and self-help cost actions; [and] the market’s pessimism on business fundamentals, particularly regarding competitive pressures and portfolio commoditisation, seems excessive to us."
It concluded: "Notwithstanding some possible near-term growth headwinds in the pharma business from the recent US policy changes, there is significant mid-to-long-term earnings upside optionality from Croda’s strong pipeline of customer projects across multiple pharma segments.
"Improved earnings delivery close to the sitting consensus should likely drive a step-by-step rerating of the shares."
On Thursday, Croda reiterated its full-year outlook after third-quarter sales were bolstered by strong performances in its consumer care and life sciences divisions.
As at 0900 BST, shares in the blue chip were trading 2% lower at 2,833p, amid difficult trading across the London market.
