BoA lowers PPG Industries Q1 EPS estimates

01 April 2008 09:03  [Source: ICIS news]

MUMBAI (ICIS news)--Bank of America (BoA) has slightly lowered PPG Industries' first quarter earnings per share (EPS) estimate on risks from the acquisition of Sigma-Kalon, a strike at GM’s auto plant and interest expenses, it said on Tuesday.

PPG would have to bear the full interest burden of its acquisition in its first-quarter of ownership that would also be the weakest seasonally, it added in a statement.

BoA revised the coating and chemical manufacturer’s first quarter EPS estimates down to $1.07 (€0.67) from $1.17, while maintaining its 2008 and 2009 EPS estimates.

Sales volumes in the first-quarter would also be affected by an earlier Easter holiday and the auto strike, the bank said.

Risks to PPG Industries could come from the deceleration of manufacturing and housing, higher natural gas and raw materials prices and any auto production costs, it added.

However, potential catalysts for the company could come from multiple expansion on mix improvement, higher growth and diminished cyclicality, natural gas cost fluctuations and substantial accretion to 2009’s EPS from the acquisition, BoA said.

"We consider PPG a well-managed company with ongoing, favourable portfolio transformation," the bank said adding in its view that multiple expansion is justified.

BoA maintained PPG Industries' target price at $87/share and its "buy" rating on the stock.

PPG's stock closed up 2.07% on Monday at $60.51 on the New York Stock Exchange.

($1= €0.63)

By: Aaron Rodrigues
+65 6780 4359

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