Axalta Coating upgraded to Outperform at RBC on expected EBIT recovery

As previously reported, RBC Capital analyst Arun Viswanathan upgraded Axalta Coating to Outperform from Sector Perform with a price target of $36, up from $30. The Mobility Coatings segment’s annual EBIT has declined by over $100M due to lagging price and cost inflation, but the firm expects new CEO Chris Villavarayan to emphasize "commercial courage" through pricing actions, along with moderating cost inflation, to recapture "most and potentially more" of the segment EBIT that has been lost, the analyst tells investors. With higher earnings, the firm is expecting capital allocation focused on gross debt reduction and sees it as another step towards fixing internal profitability to set up FY24 for capital return to shareholders and potential bolt-on M&A.