Look For PPG Industries To Benefit As Europe Economy Improves

PPG Industries, Inc. PPG boasts an impressive scale, product diversity and geographic mix which sets the specialty chemical company apart from its peers, according to analysts at Argus.

Argus' Bill Selesky upgraded PPG's stock from Hold to Buy with a newly established price target of $136 that implies a potential 20 percent return (including dividends) moving forward.

Among the primary reasons to support a bullish stance include expectations for improving economic conditions in the European market, which already accounts for nearly 30 percent of total revenue. In fact, despite "fairly uneven" economic conditions in many end markets the company was still able to post strong operational and financial results, which implies the company can thrive in better conditions.

As such, PPG's exposure to Europe is expected to yield stronger revenue and margin growth, especially since it's a top producer in the high-growth and high-margin coatings business. In addition, the company's recent exit of the fiber glass business to focus on coatings frees up management's focus to target the more lucrative segments.

Also, PPG's failed attempt to acquire the Dutch-based paint and chemical maker AkzoNobel doesn't affect PPG's status as an ongoing leader in the global coatings industry and the company will be "an active participant" in future M&A deals and industry-wide consolidation.

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