AkzoNobel Drops 2023 Targets on Macroeconomic Uncertainty; Shares Undervalued

Narrow-moat AkzoNobel reported third-quarter EBIT of EUR 184 million, down 24% over the prior-year period. EBIT was EUR 201 million, excluding the impact of hyperinflation accounting, in line with the prequarter profit warning and Vara consensus. Given continued macroeconomic deterioration, AkzoNobel has dropped its 2023 targets, notably the ambition to reach EBITDA of EUR 2 billion. This is not a surprise. We are currently forecasting 2023 EBITDA of only EUR 1.3 billion while consensus is calling for EUR 1.5 billion. Consequently, shares are only down modestly intraday, around 3%. We don’t expect to make a material change to our EUR 100 fair value estimate. At current levels, the shares look undervalued.