Last Update 10 Dec 25

Fair value Increased 0.28%

SYNT: Self-Help Actions Will Drive Earnings Recovery Despite Neutral Market Sentiment

Analysts have trimmed their price target on Synthomer slightly. This reflects a modest recalibration in fair value to approximately £1.34 per share following a series of recent target cuts that have reset expectations for the stock.

Analyst Commentary

Recent commentary from JPMorgan underscores a more cautious stance on Synthomer, with successive reductions in the price target to 102 GBp from 200 GBp earlier in the year. Despite the cuts, the Neutral rating signals that analysts see both upside and downside risks, largely balanced around execution on the company’s turnaround strategy and end market recovery.

Bullish Takeaways

Bullish analysts note that the maintained Neutral stance, rather than a downgrade to a more negative rating, suggests that the current valuation already reflects a substantial amount of recent bad news.
There is optimism that operational improvements and disciplined cost management could drive margin recovery, supporting the potential for re rating if demand stabilises.
Analysts highlight that a clearer path to earnings normalisation, particularly as destocking pressures ease, could justify upside from the current, more conservative price targets.
The step down in targets is viewed by some as resetting the bar to a more achievable level, which may allow Synthomer to outperform if execution on strategic initiatives exceeds expectations.

Bearish Takeaways

Bearish analysts emphasise that two successive price target cuts, from 200 GBp to 112 GBp and now to 102 GBp, indicate persistent concerns over visibility on volume recovery and profitability.
There are ongoing worries that weaker than expected end market demand could limit near term earnings growth, constraining any meaningful re rating in the share price.
Some see the reduced target as reflecting structural challenges in Synthomer’s portfolio, including potential pressure on pricing power and returns across key product lines.
The continued Neutral rating, despite lower targets, is interpreted as a signal that upside catalysts are not yet clearly identifiable, leaving the risk reward profile relatively unexciting in the short term.

What's in the News

Issued earnings guidance for 2026, expecting progress in Group earnings and cash generation driven by full year benefits from self help actions and product investments (company guidance).
Formed a strategic partnership with Lummus Technology to license Synthomer's proprietary acrylic acid esters technology, leveraging Lummus' global licensing platform and customer network (company announcement).
Partnership with Lummus targets robust acrylic acid esters production solutions using a variety of raw materials, including bio based feedstocks, supporting higher performance applications and potential sustainability benefits (company announcement).

Valuation Changes

The fair value estimate has risen slightly to approximately £1.34 per share, up from about £1.34 previously, reflecting a marginal uplift in the modelled equity value.
The discount rate remains unchanged at 13.19 percent, indicating no revision to the assumed risk profile or cost of capital.
Revenue growth assumptions have fallen slightly, with the long-term growth rate moving from roughly 1.86 percent to about 1.84 percent.
Net profit margin expectations are effectively unchanged at just over 10.09 percent, signalling stable assumptions for long-term profitability.
The future P/E multiple has risen slightly from around 1.57x to about 1.58x, implying a modestly higher valuation multiple on expected earnings.

Focus on specialty polymers, cost-reduction, and global diversification positions Synthomer to achieve better margins, stable earnings, and long-term growth in sustainable markets.
Expansion into eco-friendly products and high-growth regions leverages regulatory trends and urbanization, supporting multi-year revenue and margin improvement.
High leverage, slow market growth, overcapacity, shifting sustainability demands, and geopolitical risks constrain Synthomer's growth, margins, and ability to invest in innovation.

Catalysts

About Synthomer

Manufactures and supplies specialised polymers and ingredients for coatings, construction, adhesives, and health and protection sectors.What are the underlying business or industry changes driving this perspective?

The company's active pivot toward higher-value, specialty polymers-evidenced by the ongoing divestment of noncore, lower-margin businesses, portfolio simplification, and site rationalization-positions Synthomer to capitalize on long-term demand for sustainable and innovative chemicals. This shift is likely to enhance revenue quality, boost EBITDA margins, and support earnings growth by increasing pricing power and market relevance in growth segments.
Significant cost-reduction initiatives, alongside ongoing process automation and supply chain efficiencies, are generating higher operating leverage and margin improvement (e.g., a 110 bps gross margin gain YoY). As these cost programs deliver additional run-rate savings through 2026, Synthomer is set to unlock structural margin expansion and stronger free cash flow.
Emerging sustainability-related opportunities (such as ISCC+ certification, innovation in bio-based and biodegradable polymers, and marquee partnerships like Henkel) directly position Synthomer to benefit from regulatory and customer demand for low-emission, circular, and environmentally friendly products. This will drive new specialty product launches and open up higher-margin revenue streams.
Global trends toward urbanization, infrastructure investment, and healthcare spending (especially in Asia and emerging markets) are long-term tailwinds for demand in construction chemicals, adhesives, and medical/hygiene materials-core focus areas for Synthomer. This supports multi-year revenue growth potential as these markets recover and expand.
Geographical diversification and targeted capacity investments in the U.S. and Middle East, coupled with a more balanced sales mix, are reducing exposure to slower-growth European markets and volatile sectors, thereby improving earnings stability and providing a platform for medium-term top-line growth and improved net margins.

Synthomer Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Synthomer's revenue will grow by 2.9% annually over the next 3 years.
Analysts are not forecasting that Synthomer will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Synthomer's profit margin will increase from -4.0% to the average GB Chemicals industry of 8.0% in 3 years.
If Synthomer's profit margin were to converge on the industry average, you could expect earnings to reach £165.3 million (and earnings per share of £1.01) by about September 2028, up from £-75.9 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 2.2x on those 2028 earnings, up from -1.3x today. This future PE is lower than the current PE for the GB Chemicals industry at 22.1x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.94%, as per the Simply Wall St company report.

Synthomer Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Synthomer's high leverage and elevated net debt (with net debt to EBITDA at 4.8x and a suspended dividend until leverage falls below 3x) leave the company vulnerable to prolonged weak demand or cyclical downturns, constraining its ability to invest in growth and innovation, and putting pressure on earnings and cash flow.
The company's heavy exposure to Europe (nearly 50% of sales) in slow-growing, mature markets facing tightening environmental regulations could accelerate margin erosion and limit revenue growth, especially as the strategic shift toward the US and Asia is gradual and exposed to external risks.
Persistent industry overcapacity-especially in synthetic latex and emulsion polymers-combined with volatile or subdued end-market demand (notably in oil & gas, energy solutions, and nitrile for gloves), threatens sustained price competition and weaker revenues and profitability well beyond 2025.
Ongoing regulatory and consumer shifts toward sustainability and bio-based/biodegradable alternatives may erode Synthomer's traditional customer base in petrochemical-based products, requiring costly R&D and potentially compressing margins if Synthomer cannot quickly transition its portfolio.
The company remains exposed to volatile raw material costs, trade tariffs, and geopolitical supply chain risks, which could increase operating expenses, impact reliable product delivery, and compress net margins if such shocks persist or intensify.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £1.54 for Synthomer based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £3.66, and the most bearish reporting a price target of just £0.7.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £2.1 billion, earnings will come to £165.3 million, and it would be trading on a PE ratio of 2.2x, assuming you use a discount rate of 12.9%.
Given the current share price of £0.58, the analyst price target of £1.54 is 62.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Future Earnings And Recovery Prospects Will Remain Under Pressure Amid Market Challenges