Evercore ISI Starts Axalta Coating Systems (AXTA) at Outperform

Evercore ISI analyst Eric Boyes initiates coverage on Axalta Coating Systems (NYSE: AXTA) with a Outperform rating and a price target of $47.00.

The analyst comments "A dominant market leader in Refinish and Mobility coatings born out of a Carlyle-engineered spin of DuPont Performance Coatings in 2013, AXTA struggled to find its way over the years preceding the pandemic. After three CEO transitions in roughly as many years and considering potential sale of the company, Chris Villavarayan (formerly of Meritor) was appointed CEO in Nov 2022. Management change and the selfimprovement initiatives swiftly implemented have injected momentum both commercially and in the stock. EBITDA growth of +17% y/y in ‘23 and on pace for another +17% in ‘24 preview a path of value creation via margin expansion and a mix of organic + inorganic growth. Better stock performance obscures that the multiple has not expanded alongside improved fundamentals and a lower volatility go-forward. At 9.8x ntm EBITDA, AXTA still trades at a ~2 turn discount to (recently de-rated) refinish/industrial coatings competitor PPG and 3+ turns below materials/industrials peers with similar fundamental profiles. Timing and catalysts can challenge re-rate stories but we think new management proving out consistent operational execution combined with success of the formal A-Plan construct begin to kickstart gradual multiple expansion. Just 1 turn expansion to 11x our 2025 EBITDA of $1.2 Bn supports a $47/shr PT representing 17% upside from last. Initiate Outperform."

For an analyst ratings summary and ratings history on Axalta Coating Systems click here. For more ratings news on Axalta Coating Systems click here.

Shares of Axalta Coating Systems closed at $40.19 yesterday.

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