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Axalta’s Stock Price Spikes as It Plans a Rapid Expansion

Peter Neil - Author

Dec. 12 2016, Updated 1:05 p.m. ET

Axalta aims to improve its market share in Mexico, Central America

On December 6, 2016, Axalta (AXTA) introduced its new Procor HP line in Mexico and Central America. Axalta claims that this product will give long-term protection to materials that are exposed to tough conditions.

The new line of products will be available in packages of different capacities. It will serve the needs of industrial and architectural segment customers.

On the same day, Axalta also announced that it would expand production in its facility in Landshut, Germany. Following the expansion, Axalta will manufacture its Alesta brand of coatings in the facility.

Alesta powder coatings are used to coat vehicle parts such as chassis, brackets, wheels, and seat frames. Alesta is known for its durability and heat and corrosion resistance. Axalta expects demand in the EMEA (Europe, the Middle East, and Africa) region to rise.

Both these actions suggest that Axalta aims to capture a greater market share and could be thinking of making all of its products available in all geographical locations, which could lead to more market share and revenue growth.

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Axalta’s stock price

On December 9, 2016, Axalta closed at $27.13 and rose 8.3% for the week. The iShares U.S. Basic Materials ETF (IYM), which held 0.9% in AXTA on December 9, rose 3.3% for the week and closed at $86.57.

AXTA’s peers Sherwin-Williams (SHW), RPM International (RPM), and Valspar (VAL) rose 2.2%, 4.6%, and 0.5%, respectively, in the same period. AXTA’s stock price closed marginally lower than its 100-day moving average of $27.20, indicating a downward trend in the stock.

Analysts expect AXTA’s 12-month target price to be $31.00, implying a potential return of ~14.3% over its closing price on December 9, 2016. On a year-to-date basis, AXTA has risen 1.8%.


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