Shares of PPG Industries spiked 4.7% on Thursday after the company released 3Q preliminary earnings results, which exceeded analysts’ expectations.
The supplier of paints and specialty materials is now guiding for 3Q earnings per share of $1.90 to $1.94, representing year-over-year growth of 14% to 16%. The company’s profit outlook beat Street estimates of $1.44.
PPG Industries (PPG) now projects 3Q sales to decline 5% on a year-over-year basis. The company had previously expected revenues to fall in the 6%-11% range. Wall Street analysts’ estimates indicated a decline of 7.9%.
PPG said, “The better than expected quarterly financial results were driven by improving demand in several end-use markets resulting in higher sales volumes, coupled with continued, aggressive cost management actions. These factors are generating higher year-over-year operating margins within both of PPG’s reportable business segments.” (See PPG stock analysis on TipRanks)
Last month, Robert W. Baird analyst Ghansham Panjabi reiterated his Buy rating and the price target of $130 (3.7% downside potential) on the stock citing the company’s strong execution and considerable balance sheet flexibility. Panjabi believes that PPG well poised to gain from broader macroeconomic recovery.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 11 Buys and 6 Holds. However, the average price target of $131 implies downside potential of about 3% to current levels, with shares only up 2.6% year-to-date.
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