PPG Jumps to 52-Week High After Earnings Report

A number of Wall Street analysts lauded PPG's better-than-expected first-quarter earnings.
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Shares of PPG Industries  (PPG) - Get Report touched a 52-week high on Friday after the paints, coatings and specialty materials company more than doubled first-quarter earnings and received positive reviews from a number of Wall Street analysts.

Both earnings and revenue exceeded analysts' expectations.

Shares of the Pittsburgh company at last check jumped 11% to $170.30. They've traded up as much as 12% at $172.67.

Net income rose 56% to $378 million, or $1.58 a share, from $243 million, or $1.02 a share, in the year-earlier period. The latest adjusted earnings were $1.88 a share.

 Analysts surveyed by FactSet were expecting GAAP earnings of $1.45 a share, or an adjusted $1.57, in the latest period.

Revenue rose 15% to $3.88 billion from $3.38 billion. FactSet's survey called $3.67 billion in the latest period.

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"We achieved these results despite experiencing accelerating raw material and logistics cost inflation during the quarter, and with demand remaining tepid in the global commercial aerospace and U.S. protective coatings end-use markets," Michael H. McGarry, chairman and chief executive at PPG, said in a statement.

The earnings showed the paint supplier’s ability to manage through inflation and pricing/supply issues while demonstrating its value as a core holding for investors in their portfolios, BMO analyst John McNulty said.

The stock should "be strong in the near-term and “grind solidly higher” in coming months," McNully added.

"The results and forecast showed that investors can “increasingly view PPG as a name to rely on through the macro recovery regardless of inflation.”

Analysts at BMO rate the stock as outperform with a price target of $185 a share.

Morgan Stanley’s Vincent Andrews said "PPG will remain very confident in its pricing capabilities given already solid pricing momentum going into the reflationary environment." 

He expressed some concern about the impact of higher raw material costs on the latter half of 2021.

RBC analyst Arun Viswanathan said PPG's results show an improving economic environment and the company seems to be doing a good job of managing costs and creating operating leverage. 

RBC rates PPG outperform with a price target of $167.

And Morgan Stanley has an equal-weight rating on PPG with a price target of $147.

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CEO McGarry said that "[looking] ahead, we expect overall global coatings demand growth to be broad-based across most of the end-use markets that we supply, including an eventual replenishment of many of our customers’ inventories."

PPG expects second-quarter adjusted earnings per share between $2.15 and $2.20, the company said. FactSet's call: $2.04 a share.

"In addition, I am encouraged to see an increase in domestic flight activity in various parts of the world, which should support the gradual recovery in aftermarket aerospace coatings demand in the second half of 2021," he said.

PPG has 18 buys, 8 holds and 1 sell, and a 12-month average price target of $159, according to Bloomberg data.