Axalta: Solid Execution but Prolonged Merger Timeline and Auto Refinish Headwinds Justify Hold Rating

Axalta Coating Systems, the Basic Materials sector company, was revisited by a Wall Street analyst yesterday. Analyst Ghansham Panjabi from Robert W. Baird downgraded the rating on the stock to a Hold and gave it a $35.00 price target.

Ghansham Panjabi has given his Hold rating due to a combination of factors related to Axalta’s current performance and its evolving strategic situation. He acknowledges that the company has delivered strong operational execution over the past two years, generating solid free cash flow and steadily reducing leverage, and he values the business at a $35 price target based on roughly 13x his 2026 EPS estimate. However, he expects the regulatory review and integration process tied to the planned merger with AkzoNobel to take an extended period, stretching into late 2026 or early 2027, which could cause the stock to trade more on deal-related headlines than on underlying fundamentals.
At the same time, Panjabi highlights that Axalta’s Auto Refinish segment, an important and highly profitable part of the portfolio, is facing a difficult demand environment that is likely to persist until around mid-2026. This ongoing volume weakness, he believes, may weigh on investor sentiment even as the broader business continues to execute reasonably well. Taken together, the long and uncertain merger timeline, the expected disconnect between fundamentals and share performance, and the near-term headwinds in Auto Refinish lead him to conclude that a Neutral, or Hold, stance is more appropriate at current levels rather than a more aggressive recommendation.