Update shared on 16 Dec 2025
Fair value Increased 0.18%Axalta Coating Systems’ fair value estimate has been nudged higher to approximately $36.87 from $36.80, as analysts factor in slightly lower discount rates and steady long term growth and margin assumptions, despite modest price target cuts and rating downgrades following the announced merger with AkzoNobel and a softer macro backdrop for coatings demand.
Analyst Commentary
Recent Street research on Axalta reflects a divided but generally constructive stance, with modest target cuts and some rating downgrades balancing ongoing Buy ratings. Analysts are reassessing risk reward in light of the AkzoNobel merger, a weaker macro backdrop, and execution timelines for synergy realization.
Bullish Takeaways
- Bullish analysts maintain Buy ratings even after trimming price targets, signaling confidence that Axalta’s earnings power and cash generation can still support upside from current levels.
- Despite a tougher macro environment, the long term growth profile in key end markets is viewed as intact, underpinning support for mid to high single digit revenue growth once conditions normalize.
- Some see the merger with AkzoNobel as strategically sound, with sizeable cost and revenue synergies that, if executed on plan, could drive margin expansion and enhance the company’s competitive position.
- Valuation is viewed as reasonable relative to peers, particularly if management delivers on synergy capture and avoids major integration missteps, creating potential for multiple re rating over time.
Bearish Takeaways
- Bearish analysts highlight the limited acquisition premium as a signal that near term value creation from the deal may be constrained, capping upside for existing shareholders.
- The five year horizon to fully realize synergies increases execution risk and delays the full benefit to earnings and free cash flow, which weighs on discounted cash flow based valuations.
- Muted growth across most coatings verticals, coupled with inconsistent industrial end markets, raises concern that Axalta could struggle to meet top line expectations in the next few quarters.
- Recent target cuts reflect a more cautious macro view, including signs of slippage in commodity linked businesses and the fading of hoped for seasonal tailwinds, which could pressure near term multiples.
What's in the News
- Akzo Nobel and Axalta are reported to be in advanced talks on a potential merger that could be announced as soon as November 18, 2025, creating a larger global coatings player and reshaping competitive dynamics in the sector (Bloomberg/Reuters).
- Axalta reiterated and updated its outlook, guiding to mid single digit year over year net sales growth for the fourth quarter of 2025 and projecting full year 2025 net sales to exceed $5.1 billion, supporting expectations for steady top line performance despite macro pressures (Company guidance).
- The company advanced its capital return program, repurchasing 3.3 million shares for $101.38 million in the third quarter of 2025 and completing a total buyback of 8.1 million shares for $266.68 million under the authorization announced on May 1, 2024 (Company filing).
- Axalta unveiled two new EV battery coatings, Alesta e-PRO FG Black and Alesta e-PRO Dielectric Gray, designed to improve thermal stability, fire protection, and electrical insulation in high voltage battery systems, reinforcing its push into fast growing electric vehicle and energy storage applications (Company product announcement).
Valuation Changes
- Fair Value Estimate nudged slightly higher to approximately $36.87 from $36.80, reflecting minor model refinements.
- Discount Rate edged down modestly to about 8.33% from 8.38%, implying a slightly lower perceived risk profile or funding cost.
- Revenue Growth effectively unchanged at roughly 2.15% on a long term basis, signaling stable top line assumptions.
- Net Profit Margin essentially flat at around 10.43%, indicating no material revision to long term profitability expectations.
- Future P/E inched up marginally to about 16.24x from 16.24x, reflecting a nearly unchanged valuation multiple on forward earnings.
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