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PPG Industries shares rally after 2Q profit beat

Post Time:Jul 21,2008Classify:Company NewsView:315

PPG Industries shares up after adjusted 2nd-qtr profit beats view; rising costs stoke concern

NEW YORK (Associated Press) - Shares of PPG Industries Inc. jumped Thursday after the paint, coatings and chemicals maker's adjusted second-quarter profit easily beat Wall Street's expectations, results one analyst said may soothe investors' nerves.

The Pittsburgh-based company's stock gained $3.96, or 6.9 percent, to end at $61.04. It had risen as high as $61.55 earlier in the day.

The company posted earnings _ excluding certain items _ of $269 million, or $1.62 per share. By that measure, analysts polled by Thomson Financial expected, on average, profit of $1.54 per share.

Goldman Sachs analyst Robert Koort said the results likely will "placate recent investors' anxieties about the company's fundamentals."

The stock, down about 19 percent so far this year, has been under "significant pressure" due to concern about the housing crisis and an impending slowdown in the European Union, he said.

Cost inflation continues to be a focus for paint producers, as raw material costs rose 3 percent during the second-quarter and are expected to increase at least 4 percent in the third quarter, Koort said.

"We remain encouraged by PPG's efforts in upgrading its portfolio, but the current ongoing cost inflation/ volume erosion in (its coatings unit) will temper near-term growth," Koort said in a note to clients.

Koort rates the shares "Neutral" with a $73 price target, implying he expects the stock to rise about 28 percent above Wednesday's $57.08 close.

A company representative was not immediately available for comment.

Source: Associated PressAuthor: admin

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