Analyst Note| Rob Hales, CFA |
Narrow-moat AkzoNobel reported third-quarter EBIT of EUR 325 million, down 26% versus 2020 but largely in line with Vara consensus. Shares are trading flat intraday. Raw material inflation drove the decline in profits as underlying demand remained strong. We’ve lowered our near-term estimates due to the raw materials headwind. However, we are raising our fair value estimate to EUR 107 from EUR 99 as we expect price increases to offset inflation over time and we now expect lower corporate costs in future. At current levels, the shares look undervalued.