Janney Lowers PPG Industries to 'Hold'

Analyst Jeffrey Peck cites seasonal slowdowns and inventory reductions for the auto supply company's sluggish earnings

Janney Montgomery downgraded PPG Industries (PPG ) to hold.

Analyst Jeffrey Peck says seasonal slowdowns and inventory reductions in end-markets, a weak U.S. industrial economy and higher energy prices are the main culprits. Peck notes the fourth quarter is slower than he predicted. He says the first three quarters of 2002, PPG continued to beat or meet rising earnings per share estimates, but that the company lost its inertia.

Given the perception that PPG is mostly an auto supply firm (the reality is different), Peck sees PPG trading closely with auto/supply companies. He feels the market will place lower valuation multiples on 2003 estimates. Hence, he cut the $60 target to $48. He also cut the $2.98 2002 earnings per share estimate to $2.80, and sees $3.15 for 2003.