Jefferies revises PPG stock target, forecasting 11% EPS CAGR through 2027

On Monday, Jefferies revised its price target for PPG Industries (NYSE:PPG (WA:IBSP)) shares, dropping it to $127 from the previous $133, while keeping a Hold rating on the stock. The adjustment comes amid anticipated challenges in the automotive, packaging, and industrial sectors, which may affect the company's near-term performance. Currently trading at $114.27, near its 52-week low of $113.49, InvestingPro analysis suggests the stock may be undervalued, with 5 analysts recently revising their earnings expectations downward.

The firm's analyst cited several factors for the revision, including potential headwinds in key markets for PPG Industries. The updated outlook also takes a more guarded view on the timing and vigor of an expected cyclical upturn in the industry. Despite these concerns, Jefferies predicts an 11% compound annual growth rate (CAGR) in earnings per share (EPS) for PPG Industries through 2027. The company maintains strong fundamentals with a market capitalization of $26.48 billion and an EBITDA of $2.87 billion.

The forecast also includes an average annual free cash flow (FCF) before dividends of $9.35 per share, which translates to an 8% FCF yield. This figure is crucial for investors as it indicates the company's ability to generate cash and potentially return value to shareholders.

Notably, InvestingPro data reveals PPG has maintained and raised its dividend for 54 consecutive years, demonstrating strong commitment to shareholder returns. Get access to more valuable insights and 8 additional ProTips with an InvestingPro subscription.

The note from Jefferies suggests that PPG Industries' share momentum is likely to be influenced by the broader economic environment, specifically consumer confidence. This sentiment is expected to have a direct impact on automotive production schedules in the second half of 2025 through 2026, which are critical for the company's performance.

PPG Industries, a global supplier of paints, coatings, and specialty materials, is facing a period of uncertainty as it navigates through the projected headwinds. The company's stock performance in the near future is anticipated to closely align with the ebbs and flows of market demand in its key business segments.

In other recent news, PPG Industries has seen significant developments that are expected to shape its future. The company reported Q3 sales of $4.6 billion, marking a 3% increase from the previous year. PPG Industries also completed the sale of its architectural coatings business in the United States and Canada to American Industrial Partners, a $550 million deal expected to positively impact PPG's financials.

Analysts from RBC Capital Markets and BMO Capital Markets adjusted their price targets for PPG Industries due to challenges in the automotive and industrial sectors, with RBC lowering its target to $136.00 and BMO reducing its target to $155.

PPG Industries announced a series of leadership changes, including the appointment of Juliane Hefel as Senior Vice President of Industrial Coatings and Xiaobing Nie expanding her leadership duties to cover all of Asia Pacific for industrial coatings. The company also disclosed the retirement details of Senior Vice President, Operations, Ramaprasad Vadlamannati, who will transition to an unpaid leave of absence throughout 2025, with a separation agreement that includes a $102,000 payment.

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