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Invesing.com -- Kepler Cheuvreux upgraded Air Liquide (EPA:AIRP)to “hold” from “reduce” rating after raising its target price to €176 from €174, citing the industrial gas maker’s resilience in a weak macroeconomic climate.
The brokerage described Air Liquide as a “safe haven stock” and said its unchanged 2025 guidance signals rare stability in a quarter where many chemical companies are expected to issue profit warnings.
The brokerage expects Air Liquide’s third-quarter 2025 sales, due October 28, to fall 2% year over year to €6.59 billion, slightly below the Visible Alpha consensus of €6.70 billion.
Comparable sales growth is forecast at 1.7%, matching consensus, while foreign exchange effects are seen at negative 3.9%. Energy pass-through effects are projected at zero.
“Air Liquide is a safe haven stock thanks to its resilient business model,” Kepler Cheuvreux said, noting that “Guidance will be unchanged. This is very positive news in a situation when many other companies are set to publish poor Q3 results and profit warnings.”
The brokerage expects the company to reiterate its 2025 targets for adjusted net profit growth (excluding FX effects) and EBIT margin expansion (excluding energy pass-through effects).
Earnings forecasts were trimmed slightly, with EPS estimates for 2025 and 2026 cut by 1% each to reflect less favorable currency trends in the second half of 2025. The 2027 EPS forecast remains stable as margin expansion is expected to offset FX headwinds.
The brokerage projects a 260-basis-point adjusted EBIT margin gain between 2024 and 2026, exceeding Air Liquide’s goal of a 200-basis-point increase.
Kepler Cheuvreux remains 5% below consensus on EPS projections for 2025–2027 due to higher special items assumed in its model.
The firm incorporated negative €330 million in special items for 2025, compared with Visible Alpha’s negative €160 million estimate.
On cash flow, the analysts expect a positive surprise in operating cash flow before working capital changes, boosted by a €100 million refund from the U.S. administration.
The refund follows a retroactive policy allowing Air Liquide to deduct 100% of its U.S. capital expenditure from tax payments, up from 60%, which will add €75 million in Q3 and €25 million in Q4 2025.
The target price revision stems from a 10-basis-point reduction in the weighted average cost of capital to 5.9% after the cost of equity for French companies was adjusted to 9.4% from 9.5%.
This lifted the DCF-based fair value to €196.8 per share from €193.7. The peer group-based fair value rose marginally to €155.6 from €155 after the EBITDA margin gap to peers narrowed, prompting a reduction in valuation discount from 14% to 13%.
Combining both valuation methods, the average fair value stands at €176 per share, offering limited upside. In a period of profit warnings across the chemical sector, Air Liquide provides investors with shelter, the brokerage said.
Kepler Cheuvreux’s strategy team also indicated a broader rotation toward growth stocks, a shift expected to support Air Liquide’s performance given its strong cost efficiency, rising margins, and exposure to resilient sectors such as healthcare and food and beverage.