Our target price on AXTA is $35. We use an EV/EBITDA valuation methodology for AXTA. We value the shares based on ~8.75x our 2026 EBITDA estimate of ~$1.2bn. AXTA is valued at a discount to peer PPG given PPG’s broader end market exposure.

Risks to the achievement of our target price include the following: 

Economic Risks – An economic slowdown or a major recession could have a severe impact on Axalta’s end markets – particularly the automotive OEM and industrial coatings businesses, which are highly cyclical. 

Raw Material Risks – Axalta buys oil-derived raw materials like epoxies, solvents and resins, plus inorganic materials like TiO2. In the past, paints and coatings companies have been able to pass through higher raw material costs with a lag and, if AXTA can achieve this faster than usual, it could represent upside risks to our estimates. 

Currency Risk – Axalta has significant exposure to the Euro. Within the EMEA region, Germany, France, Spain, and Italy account for roughly half of the region’s sales. While some of the currency risk is “naturally” hedged given that local operating costs are also in Euros, significant fluctuations in the Euro could have implications for Axalta’s earnings. The company also has exposure to the Brazilian Real and Mexican Peso. Currency fluctuation constitutes a downside risk. 

If any of these factors proves to have less of an effect than we anticipate, the stock could outperform our target price. Conversely, if any of these factors proves to have more of an effect than we anticipate, the stock could underperform our target.