What’s Driving the Upgrade? BofA Securities analyst Steve Byrne upgraded Air Products & Chemicals IncAPD to Buy, offering a price target of $264.
A Positive Outlook: The upgrade is underpinned by an unwarranted valuation disconnect, decreased risk in speculative project backlog, and a robust base business.
Insights Into Recent Performance: Air Products reported first-quarter 2024 adjusted EPS of $2.82, marking a 7% increase year-over-year. Sales, on the other hand, saw a 5.6% YoY decline to $2.997 billion. These figures missed the consensus estimates.
Challenges: The company experienced challenges in its helium business, which accounts for less than 10% of its sales, due to reduced demand and Russian exports. However, the analyst foresees a potential recovery with fab operating rates.
Concerns and Estimates: Investors have expressed concerns about the returns on Air Products’ more speculative projects, including the green ammonia project in NEOM and the $7 billion Louisiana blue hydrogen/ammonia complex. The analyst has provided EPS estimates for FY24, FY25, and FY26.
Current Price Action: APD shares are up 4.4% at $226.54 during the latest check on Thursday.
