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UBS maintained its Neutral rating and $111.00 price target on PPG Industries (NYSE:PPG) stock Wednesday. According to InvestingPro analysis, PPG (WA:IBSP) appears undervalued at current levels, with analyst targets ranging from $105 to $166. The decision reflects the firm’s assessment of PPG’s growth trajectory and potential headwinds.
PPG has not updated its longer-term targets, which UBS believes remain at 2%-4% organic sales growth over time and an 8%-12% earnings per share compound annual growth rate. These targets were established during a previous investor day presentation. The company has demonstrated strong financial discipline, maintaining dividend payments for 55 consecutive years, with a current yield of 2.43%.
UBS projects lower near-term growth than PPG’s targets, partly due to expectations of weaker macroeconomic growth and higher raw material costs. The firm models approximately 2% adjusted EPS growth for PPG in 2026, below the company’s long-term target range. InvestingPro data shows PPG maintains a healthy financial position with a "GOOD" overall score, supported by strong profitability metrics including a 41.7% gross margin.
The UBS analysis incorporates higher raw material costs from potential tariffs, though it notes these now appear "less likely" to materialize. The impact on PPG would also be mitigated by the company’s "more diverse global mix" of operations. Discover more insights about PPG’s financial health and growth prospects with InvestingPro, which offers exclusive ProTips and comprehensive analysis for informed investment decisions.
This global diversification could prove "more positive for PPG’s earnings growth" if tariff concerns continue to ease, potentially providing a tailwind for the company’s financial performance beyond current projections.
In other recent news, PPG Industries reported better-than-expected earnings for the first quarter of 2025, with adjusted earnings per share of $1.72, surpassing the forecast of $1.64. The company’s revenue also slightly exceeded expectations, coming in at $3.68 billion compared to the anticipated $3.67 billion. Meanwhile, PPG Industries introduced a new line of eco-friendly powder coatings, PPG ENVIROLUXE™ Plus, which incorporates recycled plastic and is free from certain harmful substances. This product launch aligns with the company’s ongoing commitment to sustainability.
Analyst firms have expressed varied views on PPG’s stock. Bernstein SocGen Group reiterated its Outperform rating, highlighting the company’s restructuring efforts and potential for improved performance. Conversely, Jefferies reduced the price target for PPG Industries to $110, maintaining a Hold rating due to anticipated challenges in the automotive sector. Despite these challenges, Jefferies noted potential margin improvements from increased productivity and lower raw material costs.
Bernstein analysts also emphasized their preference for PPG within the European chemicals sector, citing its stronger fundamental profitability and cash flow. These recent developments reflect PPG’s strategic focus on enhancing its business operations and maintaining competitiveness in the market.
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