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On Tuesday, JPMorgan downgraded Air Liquide (EPA:AIRP) SA (AI:FP) (OTC: OTC:AIQUY) stock rating from Overweight to Neutral and adjusted the price target to €190.00 from the previous €195.00. The decision was influenced by the stock’s performance, which has seen a significant year-to-date increase, outpacing the sector’s growth. The company, currently valued at $117 billion, trades at $40.72 per share.
Air Liquide shares have risen by 26.26% year-to-date, significantly outperforming the sector’s 4% increase. The stock currently trades near its 52-week high of $40.88, having risen 29% from its 52-week low of $31.68. JPMorgan analysts suggest that the potential for further upside is now more limited, prompting the downgrade. The new price target is based on a Discounted Cash Flow (DCF) analysis projecting to December 2026. According to InvestingPro, the stock appears to be trading above its Fair Value.
The firm also revised its adjusted earnings per share (EPS) estimates for fiscal years 2025 and 2026, reducing them by approximately 2%. This adjustment reflects the impact of the recent substantial strengthening of the euro. The new forecasts for adjusted EPS are now 2% and 1% below the Bloomberg consensus for FY25 and FY26, respectively. Notably, InvestingPro data shows the company maintains a "GOOD" overall financial health score of 2.97, with particularly strong profitability metrics. The company has also maintained dividend payments for 34 consecutive years, with a current dividend yield of 1.29%.
Air Liquide’s stock is currently trading at a forward price-to-earnings (P/E) ratio of 27 times for FY25 and 24 times for FY26 based on JPMorgan’s estimates, with a current P/E ratio of 31.05. This valuation is compared to the historical median P/E ratios of 24 times for the past five years and 22 times for the past ten years. Additionally, the P/E discount of Air Liquide to its peer Linde (NYSE:LIN), as covered by Jeff Zekauskas, has narrowed to 4%, which is less than the median discount of 9% to 10% observed over the past three to five years. For deeper insights into Air Liquide’s valuation metrics and additional financial analysis, investors can access more than 10 exclusive InvestingPro Tips and comprehensive financial data.
JPMorgan’s stance reflects a balanced view of risk/reward for Air Liquide shares in the current market, acknowledging the company’s favorable mid- to long-term investment outlook while also recognizing the stock’s recent strong performance relative to the sector.
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