Seaport Global Securities reassessed its investment rating for Axalta Coating Systems (NYSE:AXTA), moving it from Buy to Neutral on Friday, reflecting concerns about waning demand projected for early 2026. According to investing platform data, Axalta's stock has exhibited a strong price rally, increasing approximately 13.6% over the past six months, signaling potential overbought conditions based on its relative strength index (RSI).
The analyst firm highlighted that although Axalta confronts challenges in demand, particularly anticipated declines in its Performance Coatings segment, the company’s structural and temporary cost-saving initiatives provide confidence in achieving stated guidance targets. Seaport Global linked the rating revision partly to a notable approximate 21% surge in Axalta’s stock price following its mid-November announcement of a planned merger with AkzoNobel.
Despite this recent appreciation, evaluations grounded in fair value assessments suggest the stock may still hold slight undervaluation. Seaport projects that organic sales within Axalta’s Performance Coatings could decline by the high single digits year-over-year during the fourth quarter of 2025, with downturns expected across both Refinish and Industrial divisions. Concurrently, expected cost-cutting efforts and reduced discretionary expenditures are forecast to yield meaningful year-over-year margin enhancements.
Financial metrics indicate that Axalta’s gross profit margin stands at 34.6% over the trailing twelve months, complemented by a robust current ratio of 2.2, reflecting liquidity sufficient to cover short-term liabilities.
In Axalta’s Mobility segment, outlook revisions show a modest downgrade for Light Vehicle performance, with expectations for continued softness in the Commercial Vehicle segment through the first half of 2026. Margin expansion is anticipated to persist, consistent with improvements registered in the first three quarters of 2025.
Looking toward 2026, Seaport notes Axalta's EBITDA target of $1.2 billion remains intact, driven by anticipated savings from operational efficiencies and a potential stabilization in demand within the Refinish sector. However, the first quarter of 2026 may experience relatively subdued organic growth.
Additional developments include Axalta's ongoing merger negotiations with Akzo Nobel N.V., a transaction that has prompted credit rating agency Moody’s to downgrade AkzoNobel’s senior unsecured ratings to Baa3, citing the merger as a pivotal factor. Axalta’s Compensation Committee has approved retention bonuses in cash form for selected executives — namely Carl D. Anderson II, Hadi H. Awada, and Troy D. Weaver — as part of merger-related incentives.
Market analysts have offered varying perspectives on Axalta’s shares following these merger developments. UBS has also downgraded the stock from Buy to Neutral, lowering the price target to $35, remarking on constrained upside potential stemming from merger-related uncertainties. Baird concurred with a similar shift to Neutral rating and adjusted price target to $35, highlighting risks linked to regulatory review processes associated with the merger and their possible effects on Axalta’s financial fundamentals. Conversely, RBC Capital raised its price target modestly to $33 while maintaining a Sector Perform rating, influenced in part by a slight rebound noted within the automotive sector.
These concurrent factors illustrate the evolving investor sentiment and operational considerations shaping Axalta’s outlook amid merger proceedings and broader market contexts.