PPG - PPG Industries upgraded to Overweight at JPMorgan on possible profit gains

2023-04-24 08:22:20 ET

PPG Industries ( NYSE: PPG ) on Monday was upgraded to Overweight from a prior investment rating of Neutral by analysts at JPMorgan. They said the maker of paints and coatings is poised to benefit from declining costs of raw materials such as oil.

“We think that PPG ( PPG ) is underearning as a base case, in excess of $2.00 a share,” Jeffrey J. Zekauskas, analyst at JPMorgan, said in an April 24 report. “Earnings could be substantially higher as the current level of raw material prices becomes reflected in PPG’s ( PPG ) income statement.”

PPG’s ( PPG ) earnings could rise by $700 million – or $2.25 a share – this year if the cost of raw materials falls by 10%, JPMorgan said, pointing to the declines in oil prices since last year. Low prices for materials may help the company resist some of the effects of a possible slowdown in the global economy, according to the analysis.

“PPG’s ( PPG ) positive price/raw materials dynamic may provide the company with greater earnings stability or even growth under softening economic conditions,” JPMorgan said. “PPG’s ( PPG ) volumes are currently contracting and PPG’s ( PPG ) EPS is growing.”

JPMorgan raised its price target on PPG ( PPG ) to $156 a share from $130 a share.

PPG’s ( PPG ) stock on Friday rose less than 1% to close at $141.98 a share after the company said it expected to see adjusted EPS of $6.95 to $7.25 a share this year, higher than the Wall Street consensus forecast of $6.86 a share.

The company reported adjusted earnings of $1.82 a share for Q1, higher than its guidance of $1.52 to $1.58 a share from early April .

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