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Credit Suisse initiated coverage of Dutch-based AkzoNobel with an “underperform” rating

October 14/2011

(ICIS) -- Investment bank Credit Suisse has initiated coverage of Dutch-based AkzoNobel with an “underperform” rating and a ?39.50/share ($54.86/share) target price, it said on Thursday.
The specialty chemicals and paints maker’s earnings before interest and tax (EBIT) for 2012 are expected to be below market forecasts, on the back of sustained end-market weakness in residential housing across Europe and the US, the analysts added.

“AkzoNobel is exposed to residential construction markets across Europe, Americas, and Asia. AkzoNobel volumes are therefore heavily dependent on residential activity levels in these markets,” analysts said.

Credit Suisse said that European and North American residential activity is near 50-year lows.
The analysts forecast that European construction markets are likely to deteriorate further before getting better, due to above average unemployment levels, low consumer confidence and the inability to access finance, which will place ongoing pressure upon AkzoNobel’s volumes.

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