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On Wednesday, Seaport Global Securities analyst Michael Harrison downgraded PPG Industries stock, listed on the New York Stock Exchange (NYSE:PPG), from Buy to Neutral. Trading near its 52-week low of $109.15, the $24.8 billion market cap company faces mounting pressure as 12 analysts have recently revised their earnings expectations downward, according to InvestingPro data. The downgrade reflects growing concerns over the impact of tariff policies on the demand for Industrial Coatings. Harrison specifically noted a reduction in volume assumptions for Auto OEM and General Industrial sectors for the year 2025 by approximately 3%.
The analyst also adjusted expectations for other segments of PPG Industries’ business. While modest reductions were made to the Aerospace and Protective & Marine sectors, Refinish, Architectural, and Packaging (NYSE:PKG) applications are expected to remain stable. Despite the anticipated growth in Aerospace, largely driven by aftermarket sales, there is caution regarding potential supply-chain issues arising from trade policies that could hinder production.
PPG Industries is reportedly undertaking additional cost measures aimed at enhancing the company’s earnings leverage once cyclical markets rebound. The company’s strong presence in Poland and the potential resolution of the Ukraine conflict could provide opportunities for recovery, including regaining lost sales in Russia if sanctions are lifted.
However, due to the projected slowdown in the growth of the Industrial segment, PPG Industries may have to adjust its 2025 guidance range. Harrison’s analysis suggests that while certain areas of PPG (WA:IBSP)’s business could withstand the pressures of the current economic climate, the overall impact of tariff policies may pose significant challenges in the near term.
In other recent news, PPG Industries has successfully issued €900 million in 3.250% notes due in 2032, with plans to use the proceeds for general corporate purposes, including potential acquisitions and debt repayment. This financial maneuver is part of PPG’s broader strategy to bolster its financial structure. Meanwhile, JPMorgan has downgraded PPG Industries from Overweight to Neutral, reducing the price target from $145 to $115, citing Axalta’s superior demand and valuation as influencing factors. RBC Capital Markets also adjusted its outlook, lowering the price target to $120 but maintaining a Sector Perform rating, noting challenges in the automotive and industrial sectors.
BMO Capital Markets has reduced its price target for PPG Industries to $130, while still recommending the stock as an Outperform, following recent divestitures and emphasizing strategic growth. Similarly, Mizuho (NYSE:MFG) Securities cut its price target to $140 from $150 but continues to see the stock favorably, maintaining an Outperform rating. PPG Industries has reported a fourth-quarter adjusted EPS of $1.61, slightly below consensus estimates, and anticipates flat or slightly declining sales for the first quarter of 2025, with expectations for growth later in the year. The company has also outlined a $400 million share buyback plan for the first quarter of 2025 and is considering a bid for Brazil’s leading house paint brand, Suvinil. Additionally, PPG has reorganized its financial reporting to better reflect its current operations and divestitures.
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