PPG: +MSD-HSD% Aerospace CAGR Offset by Soft Macros Elsewhere

Research evidence excerpt

PPG: +MSD-HSD% Aerospace CAGR Offset by Soft Macros Elsewhere

PPG Industries, Inc.

Target/Upside/Downside Scenarios Investment summary

Limited upside potential. We believe the stock is fairly valuedPPG Industries, Inc.

at current levels, and we do not see the potential for upside

160 125 Weeks 17JAN24 - 09JUN26 due to: 1) international softness in Europe, although we may

150 be seeing some stability or even improvement through 2025;

130 2) price/cost and margin benefits are already baked into our

120 TARGETTARGET 119.00119.00 CURRENTCURRENT 116.36116.36 numbers; 3) continued slow recovery in Auto OEM; and 4)

100 general macroeconomic weakness impacting volume growth.

70 Fairly valued at current levels. Our EV/EBITDA valuation

60 multiple is currently below PPG’s historical avg of ~14.5x,

20m although we do not believe the market should place

15m

10m 5m a premium multiple vs historical given ongoing volume

2024 2025 2026

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J headwinds, weak global demand, and slow US DIY market.

PPG US Rel. S&P 500 COMPOSITE MA 40 weeks Therefore, we believe the market is incorporating volume

Source: Bloomberg and RBC Capital Markets estimates for Target headwinds and +msd% COGS inflation, partially offset by +lsd

Valuation % price.

We value PPG using a forward target EV/EBITDA multiple of

Risks to rating and price target11x on our 2026 EBITDA estimate of $2.87B for a $119 price

1. Global economic growth. Recovery in global economictarget. PPG’s historical multiple has been 9–17x EBITDA, and

growth, especially Europe, China and architectural paint,we believe our target multiple is warranted given the margin

would improve global volumes/demand. In addition, abenefits that PPG has gained through its strategic review,