JPMorgan Projects Higher 2018 Sales In Axalta Upgrade

Axalta Coating Systems Ltd. AXTA has promising growth opportunities, JPMorgan said in a Friday upgrade.  

The Analyst

Analyst Jeffrey Zekauskas upgraded Axalta from Neutral to Overweight with a $33 price target. 

The Thesis

Axalta is the most inexpensive of the major companies in the coating sector, Zekauskas said in the upgrade note. (See the analyst's track record here.) 

Last year, Axalta was involved in two separate purchase negotiations with AkzoNobel and Nippon Paints, both of which were unsuccessful, the analyst said. 

This year however, revealed a lot of change, as Charlie Shaver announced plans to step down as CEO “to pursue a unique professional opportunity," Zekauskas said. New CEO Terrance Hahn previously served as an executive for both Honeywell and Air Products.

The analyst said he considers Axalta's future growth prospects to be promising.  

JPMorgan projects 13.5-percent higher performance coating sales; 6.5-percent higher refinish coating sales; and 25-percent higher industrial coating sales in 2018. 

"During its March 2018 investor day, Axalta announced a new cost savings program, 'Axalta Way 2,' which could add $200 million in savings over the next three to four years,” Zekauskas said.

Price Action

Axalta shares were down 0.72 percent at $30.14 at the time of publication Friday afternoon. 

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The Ashgabat International Airport in Turkmenistan, which has Axalta powder coatings on its facade. Photo courtesy of Axalta.