On Wednesday, Jefferies maintained a Hold rating on shares of Axalta Coating Systems (NYSE:AXTA), while increasing the price target to $39 from $36. This adjustment follows Axalta's investor day where the company outlined its financial targets for the upcoming years.
Axalta Coating Systems has set an ambitious goal of achieving more than 60% earnings per share (EPS) growth from 2023 through 2026. This target suggests a 2026 EPS higher than $2.51, which is slightly below the consensus estimate of $2.52 but above Jefferies' own estimate of $2.40. The company's strategy to reach this goal includes share gains, the introduction of new products, and potential mergers and acquisitions.
The company plans to drive sales growth through these strategic initiatives. Additionally, Axalta is looking to optimize its operational footprint and implement cost-cutting measures. These efforts are expected to contribute to margin improvement over the next few years.
Despite anticipating input costs to remain relatively flat, the company predicts that much of the anticipated EBITDA margin expansion will result from an improved product mix and enhanced cost absorption. These factors are key components of Axalta's strategy for margin growth.
Jefferies' new price target reflects the firm's outlook on Axalta's financial goals and operational strategies as presented during the investor day. The Hold rating indicates that while the firm acknowledges the company's positive projections and strategies, it advises a cautious approach to the stock at this time.
InvestingPro Insights
As Axalta Coating Systems (NYSE:AXTA) sets its sights on significant earnings growth, current InvestingPro data provides a snapshot of the company's financial health and market sentiment. With a market capitalization of $7.85 billion and a P/E ratio of 31.74, Axalta is trading at a premium relative to its earnings. The company's revenue for the last twelve months as of Q1 2024 stands at $5.19 billion, reflecting a growth of 4.0%. This aligns with Axalta's strategic initiatives aimed at driving sales growth.
From an operational perspective, Axalta's gross profit margin is at 32.07%, and the company has an operating income margin of 12.81%, which may be poised for improvement as per its cost optimization plans. Investors may be intrigued by the company's stock performance, with a notable 15.27% return over the last month and a 19.37% return over the past year, signaling strong recent market confidence.
Considering these metrics, two InvestingPro Tips stand out: Axalta has a perfect Piotroski Score of 9, indicating strong financial health, and 14 analysts have revised their earnings upwards for the upcoming period, suggesting positive future performance. For investors looking for more in-depth analysis and additional InvestingPro Tips, they can explore the full range of insights, including 15 more tips, for Axalta at https://www.investing.com/pro/AXTA. To access these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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