Axalta Coating Systems (AXTA) shares now reflect a more balanced risk-reward in the medium term following the rally after the announcement of its merger with AkzoNobel, UBS Securities said in a note Monday.

The proposed transaction offers cost-saving potential in the long term, but added that synergies are unlikely to be visible for about two years and do not address the company's minimal topline growth, according to the report.

UBS also said the probability of a competing bid appears to be declining over time, noting that the company's modest deal break fee of less than $1 a share and reduced strategic clarity in a deal break scenario, with the CEO expected to exit after the transaction closes.

In a completed deal scenario, UBS said Axalta shares would likely trade in line with AkzoNobel, while a break scenario could see the stock de-rate until investors gain clarity on a longer term plan.

UBS downgraded Axalta Coating Systems to neutral from buy and lowered its price target to $35 from $39.

Price: 33.01, Change: -0.01, Percent Change: -0.03