Demand destruction slams US PPG hard - analysts

19 December 2008 20:24  [Source: ICIS news]

TORONTO (ICIS news)--Accelerating demand destruction in building and automotive end markets in the US and Europe has prompted Longbow Research to downgrade the shares of US chemicals and coatings firm PPG Industries to "sell" from "neutral", it said on Friday.

“We are lowering our investment rating of PPG’s … based on accelerating demand destruction across the company's North American and European businesses,” Longbow said in a research note.

A media official a PPG's headquarters was not immediately available for comment.

Longbow said the downgrade reflected PPG’s large exposure to domestic and international construction markets, as well as the domestic automotive market and possible pricing challenges in the high-flying caustic soda business in 2009.

PPG’s significant exposure to the US construction, European architectural and global auto, appliance and industrial coatings markets made for significant headwinds well into the second half of 2009, the analysts said.

Margin pressure would last into the first half of 2009, providing downside risk to earnings and PPG's share price, they added.

The analysts also lowered their fourth-quarter earnings per share (EPS) estimate for PPG to 49 cents (€0.34) from $1.07 and their 2009 estimate to $3.50 from $4.96, it said.

Longbow set a target price of $35 for PPG’s shares. The stock was down 2.51% to $41.63 in Friday afternoon trading in New York.

($1 = €0.70)

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By: Stefan Baumgarten
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