The analyst attributed the downgrade to continued weakness in Europe, deteriorating housing fundamentals, and global macro weakness.
The analyst believes the stock is fairly valued at current levels and does not see the potential for an upside due to international weakness in Europe and China.
Price/cost and margin benefits already baked into the numbers, destocking, continued slow recovery in Auto OEM, refinish and Aerospace, and general macroeconomic weakness impacting volume growth are the other factors affecting potential, cited the analyst.
Given the diversity of PPG’s end markets and geographical exposure, the analyst expects the stock to underperform versus its peers in an economic downturn.
In particular, the analyst expects Europe architectural/ DIY to continue to be weak through FY23.
The analyst expects the company and its customers to be focused on destocking and right-sizing their inventory levels during FY23, putting pressure on free cash flow.
Price Action: PPG shares are trading lower by 0.31% at $128.47 on the last check Tuesday.
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