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On Tuesday, TD Cowen adjusted its price target for Air Products & Chemicals Inc. (NYSE:APD), lowering it to $315 from the previous $325, while still endorsing the stock with a Buy rating. The revision follows the company’s recent strategic shift and financial guidance update.
Air Products & Chemicals, under new leadership, has recalibrated its financial outlook, focusing more intently on its core industrial gas operations. The company has also provided a detailed plan for its remaining clean hydrogen projects. The updated forecast for fiscal year 2025 sets the guidance midpoint at $12.00 per share, marking a 7% reduction from the prior guidance.
In addition to revising its earnings outlook, the company outlined its capital expenditure plans extending beyond FY25. The goal is to reach a free cash flow (FCF) breakeven point by FY27 and to increase capital expenditures to $2.5 billion by FY30. These measures are part of a broader strategy aimed at bolstering the company’s financial health. InvestingPro analysis reveals that 14 analysts have recently revised their earnings expectations downward for the upcoming period, suggesting careful monitoring of the company’s progress is warranted. For deeper insights into APD’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Furthermore, Air Products & Chemicals is set to reduce its workforce by approximately 11% by fiscal years 2027 and 2028. This downsizing, coupled with the company’s strategic shift, is expected to support an adjusted earnings per share (EPS) high-single-digit growth rate from 2026 to 2029. The company anticipates these actions will enhance its margins and return on capital, ultimately leading to a surplus in free cash flow.
TD Cowen’s maintained Buy rating indicates their belief in the company’s potential for growth despite the reduced price target and the current strategic realignments. The firm’s analysis suggests confidence in Air Products & Chemicals’ ability to navigate its new focus and financial targets effectively.
In other recent news, Air Products and Chemicals Inc. reported its second-quarter financial results for 2025, which fell short of market expectations. The company announced an adjusted earnings per share (EPS) of $2.69, which was below the anticipated range of $2.75 to $2.85. Revenue also came in slightly under expectations at $2.92 billion, compared to the forecasted $2.94 billion. Amid these results, Air Products revealed a plan to reduce its workforce by 2,400 employees as a cost-saving measure.
In terms of future guidance, Air Products expects its third-quarter adjusted EPS to be between $2.90 and $3.00, with a full fiscal year projection of $11.85 to $12.15. The company plans to focus on its core industrial gas business and strategic projects like green hydrogen initiatives. Despite the earnings miss, Air Products aims for high single-digit EPS growth from 2026 to 2029. Analyst firms such as BMO Capital Markets and Deutsche Bank (ETR:DBKGn) participated in the earnings call, highlighting concerns and questions about project delays and cost overruns.
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