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Axalta shares maintain Overweight rating from KeyBanc

EditorTanya Mishra
Published 09/30/2024, 09:22 AM
AXTA
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KeyBanc has maintained its optimistic stance on Axalta Coating Systems (NYSE: NYSE:AXTA), reiterating an Overweight rating and a $44.00 price target.

The firm's perspective highlights Axalta's potential to outperform long-term flat end markets through effective execution and unique growth strategies.

According to KeyBanc, Axalta is transitioning from what was once considered a "no growth" stock to a company poised for expansion under its new management.

Despite the auto industry facing challenges in the third quarter, Axalta is expected to meet its second half of 2024 guidance. The company's productivity measures, pricing strategies, and market outgrowth are believed to compensate for any potential declines in the auto OEM markets.

Looking ahead to the second half of 2025, Axalta is anticipated to gain market share in Brazil's auto OEM market following the departure of competitor BASF.

Axalta Coating Systems has been the subject of attention from financial analysts. Citi has raised its price target for Axalta from $40 to $42, maintaining a buy rating. This follows Axalta's recent earnings call, which highlighted positive developments such as significant margin improvement in its Industrial business segment and strong growth in the second quarter of 2024.

Concurrently, RBC Capital Markets has increased its price target for Axalta to $44 from $42, citing the company's impressive second-quarter performance and effective management execution.

Axalta's recent financial results showcased the highest quarterly net sales and adjusted EBITDA in the company's history. The company achieved a 4% increase in net sales, reaching $1.35 billion, and improved its adjusted EBITDA margin to 21.5%. Axalta's strong performance was attributed to growth across all its business segments, with notable achievements in its Refinish segment.

Furthermore, Axalta has forecasted that its new product, CoverFlexx, will contribute approximately $40 million to the company's total revenue in the latter half of 2024. The company is also actively seeking mergers and acquisitions opportunities to reach its $500 million growth target.

InvestingPro Insights

Axalta Coating Systems' (NYSE:AXTA) financial metrics and market performance align well with KeyBanc's optimistic outlook. According to InvestingPro data, the company's revenue growth of 3.91% over the last twelve months and a 4.4% quarterly growth indicate steady expansion, supporting the transition from a "no growth" stock as mentioned in the article.

The company's P/E ratio (adjusted) of 21.74 and a PEG ratio of 0.88 suggest that the stock may be undervalued relative to its growth potential, which resonates with KeyBanc's view of an "undemanding" trading multiple. This is further reinforced by an InvestingPro Tip noting that Axalta is "Trading at a low P/E ratio relative to near-term earnings growth."

Additionally, Axalta's strong market performance is evident from its 38.48% price return over the past year and its current price being 98.6% of its 52-week high. This aligns with another InvestingPro Tip stating that the stock is "Trading near 52-week high," which could reflect investor confidence in the company's growth strategies and market positioning.

For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Axalta Coating Systems, providing deeper insights into the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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