Last Update 16 Dec 25

Fair value Increased 0.18%

AXTA: AkzoNobel Merger Is Expected To Unlock Long-Term Upside Despite Macro Headwinds

Axalta Coating Systems’ fair value estimate has been nudged higher to approximately $36.87 from $36.80, as analysts factor in slightly lower discount rates and steady long term growth and margin assumptions, despite modest price target cuts and rating downgrades following the announced merger with AkzoNobel and a softer macro backdrop for coatings demand.

Analyst Commentary

Recent Street research on Axalta reflects a divided but generally constructive stance, with modest target cuts and some rating downgrades balancing ongoing Buy ratings. Analysts are reassessing risk reward in light of the AkzoNobel merger, a weaker macro backdrop, and execution timelines for synergy realization.

Bullish Takeaways

Bullish analysts maintain Buy ratings even after trimming price targets, signaling confidence that Axalta’s earnings power and cash generation can still support upside from current levels.
Despite a tougher macro environment, the long term growth profile in key end markets is viewed as intact, underpinning support for mid to high single digit revenue growth once conditions normalize.
Some see the merger with AkzoNobel as strategically sound, with sizeable cost and revenue synergies that, if executed on plan, could drive margin expansion and enhance the company’s competitive position.
Valuation is viewed as reasonable relative to peers, particularly if management delivers on synergy capture and avoids major integration missteps, creating potential for multiple re rating over time.

Bearish Takeaways

Bearish analysts highlight the limited acquisition premium as a signal that near term value creation from the deal may be constrained, capping upside for existing shareholders.
The five year horizon to fully realize synergies increases execution risk and delays the full benefit to earnings and free cash flow, which weighs on discounted cash flow based valuations.
Muted growth across most coatings verticals, coupled with inconsistent industrial end markets, raises concern that Axalta could struggle to meet top line expectations in the next few quarters.
Recent target cuts reflect a more cautious macro view, including signs of slippage in commodity linked businesses and the fading of hoped for seasonal tailwinds, which could pressure near term multiples.

What's in the News

Akzo Nobel and Axalta are reported to be in advanced talks on a potential merger that could be announced as soon as November 18, 2025, creating a larger global coatings player and reshaping competitive dynamics in the sector (Bloomberg/Reuters).
Axalta reiterated and updated its outlook, guiding to mid single digit year over year net sales growth for the fourth quarter of 2025 and projecting full year 2025 net sales to exceed $5.1 billion, supporting expectations for steady top line performance despite macro pressures (Company guidance).
The company advanced its capital return program, repurchasing 3.3 million shares for $101.38 million in the third quarter of 2025 and completing a total buyback of 8.1 million shares for $266.68 million under the authorization announced on May 1, 2024 (Company filing).
Axalta unveiled two new EV battery coatings, Alesta e-PRO FG Black and Alesta e-PRO Dielectric Gray, designed to improve thermal stability, fire protection, and electrical insulation in high voltage battery systems, reinforcing its push into fast growing electric vehicle and energy storage applications (Company product announcement).

Valuation Changes

Fair Value Estimate nudged slightly higher to approximately $36.87 from $36.80, reflecting minor model refinements.
Discount Rate edged down modestly to about 8.33% from 8.38%, implying a slightly lower perceived risk profile or funding cost.
Revenue Growth effectively unchanged at roughly 2.15% on a long term basis, signaling stable top line assumptions.
Net Profit Margin essentially flat at around 10.43%, indicating no material revision to long term profitability expectations.
Future P/E inched up marginally to about 16.24x from 16.24x, reflecting a nearly unchanged valuation multiple on forward earnings.

Growth is driven by innovation in sustainable coatings, digital platforms, and expansion into high-potential regions, supporting greater revenue diversification and premium pricing power.
Operational efficiency, cost management, and strategic moves into new market segments position Axalta for sustained margin improvement and incremental long-term earnings growth.
Persistent volume weakness, unfavorable price-mix, limited demand growth, and strategic constraints raise risks to Axalta's long-term margin expansion, revenue growth, and market positioning.

Catalysts

About Axalta Coating Systems

Through its subsidiaries, manufactures, markets, and distributes high-performance coatings systems in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America.What are the underlying business or industry changes driving this perspective?

Axalta is well positioned to benefit from rising demand for advanced and sustainable coatings driven by increasing global electric vehicle adoption, regulatory pressures for low-VOC and waterborne coatings, and product innovation-supported by upcoming launches like next-generation waterborne basecoats and recognition for digital paint systems such as NexJet. These factors are expected to steadily expand Axalta's addressable market and support premium pricing, potentially lifting revenue growth and gross margins.
Targeted expansion into high-growth geographies such as China and Latin America-where Axalta is outpacing market growth and securing new business wins-diversifies revenue streams and lessens reliance on slower North American markets, setting up the company for long-term topline growth.
Continued digitalization and customer-centric innovation-exemplified by the planned rollout of the Nimbus platform to 40,000 body shops and operational tools that enable upselling and efficiency-are expected to drive higher customer retention, greater share of wallet, and lower costs, supporting higher net margins and earnings.
Accelerated cost management initiatives, plant optimizations, and strong execution of the company's A Plan have resulted in a record five consecutive quarters of >21% EBITDA margins, and management sees significant future upside in operational efficiency and material performance-indicative of sustained earnings growth potential even before an end-market rebound.
Expansion into adjacencies and the mainstream/economy segments within Refinish-areas where Axalta holds lower market share and is achieving record new body shop wins-combined with robust bolt-on M&A activity, provide a long runway for incremental revenue growth and earnings leverage as these new business segments mature and macro pressures abate.

Axalta Coating Systems Earnings and Revenue Growth

Axalta Coating Systems Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Axalta Coating Systems's revenue will grow by 2.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.6% today to 10.9% in 3 years time.
Analysts expect earnings to reach $604.8 million (and earnings per share of $2.92) by about September 2028, up from $446.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $505 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.7x on those 2028 earnings, up from 15.3x today. This future PE is lower than the current PE for the US Chemicals industry at 25.9x.
Analysts expect the number of shares outstanding to decline by 0.68% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.3%, as per the Simply Wall St company report.

Axalta Coating Systems Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Extended weakness in core Performance Coatings and Refinish volumes, especially in North America, suggest secular pressures from declining collision claims, consumer pullback in repairs, distributor destocking, and higher insurance premiums may persist longer than expected-potentially constraining top-line revenue growth for multiple years.
Ongoing industry shift toward mainstream and economy body shops, while growing Axalta's customer base, is driving unfavorable price-mix trends, with lower average selling prices and margin dilution-threatening sustained EBITDA margin expansion if premium share stagnates or contracts.
Dependence on cost reduction, manufacturing rationalization, and operational efficiency for margin gains indicates limited underlying demand growth; failure to realize further productivity improvements or to outpace raw material cost inflation could cap future improvements in net margins and earnings.
Heavy capital allocation toward share buybacks over strategic M&A may limit Axalta's ability to accelerate its transition into high-growth, sustainable and digital product adjacencies, raising the risk of longer-term market share erosion and stagnating revenue as the industry evolves.
Delays in a meaningful rebound in auto production, persistent macroeconomic uncertainties, and the risk of tightened environmental regulations or raw material cost volatility could negatively impact Axalta's sales in both Mobility and Industrial Coatings, compressing both revenue and profit margins over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $37.444 for Axalta Coating Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $47.0, and the most bearish reporting a price target of just $30.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $5.6 billion, earnings will come to $604.8 million, and it would be trading on a PE ratio of 16.7x, assuming you use a discount rate of 8.3%.
Given the current share price of $31.41, the analyst price target of $37.44 is 16.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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