On Monday, BofA Securities adjusted its outlook on PPG Industries (NYSE:PPG), a global supplier of paints, coatings, and specialty materials. The firm reduced the company's price target to $164 from $167 while reaffirming a Buy rating on the stock.
PPG Industries recently reported its first-quarter adjusted earnings per share (EPS) at $1.86, which was slightly above the consensus estimate of $1.85 but fell short of BofA Securities' expectation of $1.90. The company experienced a 2% decline in organic sales, attributed to difficult comparisons in the U.S. Architectural sector due to prior-year activities with Walmart (NYSE:WMT) and the automotive refinish market, which had benefited from a winter freeze the previous year.
The company's pricing remained flat year-over-year as a third of its Industrial sales are tied to index pricing, leading to negative pricing effects within that segment.
Despite these challenges, PPG Industries saw stronger volume in its aerospace, Protective and Marine (P&M), and Mexico Architectural divisions. However, this was counterbalanced by weaker performance in the EMEA Architectural, Industrial Coatings, and U.S. & Europe Auto Original Equipment Manufacturers (OEMs) sectors.
PPG managed to expand its margins by 60 basis points year-over-year due to productivity initiatives and a decrease in raw material costs. Although the market reacted negatively to the sales downturn, BofA Securities conveyed a positive stance on PPG's fundamental business prospects.
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