SHW - PPG downgraded at Berenberg as too dependent on auto OEM recovery

PPG Industries (NYSE:PPG) -1.8% in Friday's trading as Berenberg downgrades shares to Hold from Buy with a $140 price target, cut from $180, saying the company's operational leverage is too dependent on a recovery in automotive OEM production and the aerospace market. Fundamentals in the paints and coatings sector remain solid, analysts Adrien Tamagno and Sebastian Bray said, but the group faces a combination of rising raw materials costs and interest rates, causing concerns about valuation multiples for a sector that is well liked for its strong cash flow generation. The Berenberg analysts also are wary of the high valuation multiples of U.S. housing-focused Sherwin-Williams (SHW), while saying AkzoNobel (OTCQX:AKZOY) offers an attractive value opportunity thanks to a more aggressive pricing strategy than peers and cost-cutting initiatives. PPG (PPG) recently reported better than expected Q1 earnings while revenues rose 11% to a quarterly record $4.3B.

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PPG downgraded at Berenberg as too dependent on auto OEM recovery