Citi upgrades Linde on project wins and productivity gains

Published 30/06/2025, 16:22
© Reuters.

Investing.com -- Citigroup raised its rating on industrial‑gas maker Linde plc to Buy from Neutral and lifted its price target to $535 from $500, saying strong execution on price and productivity plus a deep backlog of clean‑energy projects should keep margins climbing even if demand stays patchy.

The brokerage expects Linde’s EBITDA margin to top 40% in 2026 and lifted its EBITDA forecasts to $13.3 billion for 2025 and $14.5 billion for 2026.

Those estimates reflect “better FX and continued strong price/productivity,” Citi wrote in a second‑quarter preview note.

Linde’s operating margin improved about 120 basis points year on year in the March quarter despite flat volumes, a performance Citi sees continuing as the company leans on price increases, cost controls and a “high‑quality project backlog.”

Management has visibility on $8‑10 billion of capital spending tied to energy‑transition projects such as low‑carbon hydrogen and ammonia, the note said.

Citi also cited recent wins at Linde’s Clear Lake complex in Texas and newer awards with OCI/Woodside, Dow and the “Blue Point” venture as evidence the company is securing returns while preserving optionality to sell merchant and packaged gases.

Shares of Linde (NYSE:LIN) were up 0.7% at $466.94 in early New York trading, putting the stock about 4% below its 52‑week high of $487.49.

The bank remains constructive on the industrial‑gas sector but now prefers Linde to rival Air Products and Chemicals, where it sees a higher risk profile tied to capital‑intensive megaprojects and offtake agreements.

Citi lifted its Air Products target to $320 after nudging its 2025 and 2026 EBITDA forecasts to $5 billion and $5.5 billion, respectively.

Citi values Linde at roughly 19 times its forecast fiscal‑2026 EBITDA, saying the premium to peers is justified by the company’s project discipline, balance‑sheet strength and likely early‑cycle gains when manufacturing activity rebounds.

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