Deutsche Bank On PPG Industries: Cash Machine

Deutsche Bank has published a research report on PPG Industries PPG after the company reported its upside of $2B in cash after the quarterly earnings report. In the report, Deutsche Bank writes "PPG shares fell 2% post the Q4 release as strong segment results were overshadowed by concerns over rising raw materials and slower China GDP. With price increases in place we believe PPG will fully offset raw materials in 1H'11 with its normal 2-3 qtr lag. Then the focus will shift to PPG's deployment of ~$2B ($13/shr) of cash. While a combination of bolt-ons and buybacks is the most likely use, we also believe a large coatings acquisition is possible. While there is EPS upside from aggressive buybacks, with valuation a fair 13.1x '11E EPS." Deutsche Bank maintains its Hold rating and has raised the price target from $85 to $88. PPG Industries closed yesterday at $81.36.