Trump signs order raising Canada tariffs to 35% from 25%
Friday - UBS has adjusted the price target for Air Products & Chemicals Inc. (NYSE:APD) shares, bringing it down to $370 from the previous $395, while still upholding a Buy rating. Analysts at UBS have expressed confidence in the company’s management changes and risk approach, anticipating a more assured perspective on execution and growth.
The upcoming earnings call, scheduled for April 24, 2025, will mark the first with the new CEO at the helm. There has been investor concern since the last earnings report about a potential cut in APD’s FY25 adjusted EPS guidance. InvestingPro analysis reveals that 11 analysts have recently revised their earnings downward for the upcoming period. However, the company has demonstrated remarkable stability, maintaining dividend payments for 55 consecutive years and typically trading with low price volatility. UBS now anticipates this adjustment to be accurate and suggests that a lower guidance could set a more achievable benchmark for the new management to surpass and elevate.
UBS has revised its FY25 adjusted EPS estimate slightly downward by approximately 2% to $12.60, compared to the consensus of $12.68, with longer-term forecasts decreasing by 2-4%. Since the last earnings report, APD’s stock has seen a 12% decline, whereas its peer Linde (NYSE:LIN) PLC has only dropped 1%. Based on discussions with investors, UBS believes that investor expectations are hovering around $12.00 to $12.50, which is about 3% below the consensus at the midpoint.
The firm suggests that if investors perceive this lower range as achievable when results are presented, it could act as a catalyst for increased confidence in the stock. UBS notes that the current stock price is approaching a support level that could attract investors. By applying an adjusted EPS multiple of approximately 23-24x to the midpoint estimate of $12.25 per share, a valuation of around $290 per share is reached, which is in line with the stock’s current trading price of approximately $293.
In conclusion, UBS anticipates that Air Products’ stock multiple will climb due to long-term growth expectations and views the updated price target of $370 per share as indicative of a potential upside of over 25% in the next year. Their more conservative FY26 adjusted EPS estimate still stands roughly 4% above the consensus, factoring in project starts and cost savings. Notably, InvestingPro analysis indicates that APD is trading at a low P/E ratio relative to its near-term earnings growth, with a notably low PEG ratio of 0.26. For deeper insights into APD’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Air Products & Chemicals Inc. announced a significant pre-tax charge of up to $3.1 billion in the fiscal second quarter of 2025. This charge results from the company’s decision to exit three major projects in the United States, including a sustainable aviation fuel expansion in California and a hydrogen production facility in New York. Despite this substantial write-down, Air Products assured that its adjusted earnings per share for fiscal 2025 would remain unaffected. Meanwhile, Jefferies has raised its price target for Air Products to $417, maintaining a Buy rating, while BMO Capital Markets downgraded the stock to Market Perform with a $346 target. BMO’s downgrade reflects concerns over the company’s recent financial performance and future earnings outlook. The new CEO, Eduardo Menezes, has been proactive in reshaping the company’s strategic direction, which is evident from these project exits. Air Products is also making progress on other significant projects like the NEOM green hydrogen project in Saudi Arabia, which is nearing completion. The company’s strategic moves and analyst ratings are closely watched by investors, indicating potential shifts in the industrial gases market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.