2Q26 Specialty Chem Preview; Hormuz Headlines Disrupt Bullish Set Up

Research evidence excerpt

2Q26 Specialty Chem Preview; Hormuz Headlines Disrupt Bullish Set Up

ts AXTA 40 38

DD 153 153

and industrial solutions. RPM offers the most direct PMI leverage, while PPG and AXTA IFF 98 92

combine cyclical recovery opportunities with company-specific catalysts. Although SHW LIN 550 532

also should benefit from better price/cost spreads, we believe stronger volume growth is PPG 134 127

required for a meaningful rerating from current levels. RPM 129 125

SHW 383 369

Industrial gas stocks need macro tailwinds from here Source: BofA Global Research

APD and LIN have been managing cost well to drive growth in an uninspiring macro. BofA GLOBAL RESEARCH

Both are expected to beat and raise guidance for 2Q accordingly, with APD likely to see Acronyms:

a larger positive revision (they had more wood to chop). With Darrow cancelled, we

appreciate why investors have gotten more tactically bullish here. However, these PMI: Institute of Supply Chain

tailwinds feel increasingly priced in, as PE multiples have expanded 13% and 20% ytd Management – Purchasing Managers

(near all-time highs) on ~1% increases in our EPS targets for APD and LIN respectively. Index

Without a more compelling top line growth algorithm, we fail to see what will drive SOH: Strait of Hormuz

multiples higher from here. We are downgrading LIN to Neutral from Buy and remain

Neutral-rated on APD despite the discount to LIN given NEOM dilution to F27 and 28.

Into the print we favor ECL, coatings guide a question

With CoolIT closed and 2026 negative earnings revisions largely complete, we see ECL

as the most attractive risk/reward in our coverage universe into 2Q. Here, topline

outperformance at CoolIT and better price/cost should drive upside to 2026 and 2027

forecasts.