PPG: Cyclical Demand Recovery Will Lift Depressed Share Price Over Time

We trim our PPG Industries price target modestly to $118.45 from $119.80, as analysts lower near term expectations amid softer macro and uneven industrial demand, even as they highlight cyclical, not structural, earnings pressures and see room for valuation to recover over time.

Analyst Commentary

Recent Street research on PPG Industries reflects a mixed but generally constructive stance, with several firms trimming price targets in response to softer macro trends while still seeing scope for valuation recovery as cyclical headwinds ease.

Bullish Takeaways

• Bullish analysts argue that PPG's share price has fallen more than underlying business fundamentals, creating room for valuation multiples to expand as sentiment normalizes.
• JPMorgan highlights that current earnings are being pressured by cyclical weakness rather than structural demand erosion, supporting the case for earnings growth to re accelerate by 2026.
• Despite modest price target reductions, some research maintains positive ratings, signaling confidence in management's ability to execute through near term volatility and protect margins.
• Maintained or upgraded recommendations suggest that long term growth drivers in coatings and specialty materials remain intact, with the stock viewed as leveraged to an eventual industrial recovery.

Bearish Takeaways

• Bearish analysts are trimming price targets to reflect a more challenging macro backdrop, including weakening commodity trends and inconsistent industrial end markets that pressure near term revenue visibility.
• Neutral stances emphasize that the earnings backdrop into the second half is "decidedly negative," with earlier hopes for a more benign seasonal pattern now seen as unrealistic.
• Lowered targets in the $115 to $129 range underscore concerns that execution, while solid, may not be enough to fully offset volume softness and pricing normalization over the next few quarters.
• Some observers caution that until industrial demand stabilizes and volume growth proves sustainable, upside to PPG's valuation will likely remain capped in the near term.

What's in the News

• PPG announced that long tenured Chief Financial Officer Vince Morales plans to retire on July 1, 2026, with an internal and external search underway for his successor as part of a structured succession process (Executive Changes).
• The company introduced a new ultrafiltration antifouling membrane for industrial water treatment that is designed to handle hard to treat oily waste streams without intentionally added PFAS, targeting applications such as oil water separation and industrial wastewater reuse (Product Announcement).
• PPG completed a $690 million share repurchase program, buying back more than 6 million shares, or about 2.63% of its outstanding stock under the authorization announced in April 2024 (Buyback Tranche Update).
• PPG launched ENVIROCRON Extreme Protection Edge Plus powder coating, a one coat solution aimed at improving corrosion resistance and finish quality on sharp edges and complex metal geometries common in heavy duty and industrial equipment (Product Announcement).
• A new partnership with Solera will integrate PPG refinish coatings data into Solera’s Sustainable Estimatics platform, allowing body shops to track and manage CO2 emissions per repair in line with emerging European regulatory reporting requirements (Client Announcement).

Valuation Changes

• Fair value was trimmed slightly to $118.45 from $119.80, reflecting modestly lower earnings expectations.
• The discount rate was reduced marginally to 8.01% from 8.04%, indicating a slightly lower assumed cost of capital.
• Revenue growth was lowered moderately to approximately 2.77% from 2.98%, incorporating a softer top line outlook.
• The net profit margin was nudged higher to about 11.48% from 11.44%, assuming modest efficiency and mix benefits.
• The future P/E eased slightly to roughly 16.49x from 16.65x, embedding a small contraction in the valuation multiple.