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Investing.com -- Linde plc is viewed as a relatively defensive play in the chemicals sector due to its leading market share in industrial gases and exposure to resilient end markets such as healthcare, manufacturing and electronics, according to UBS.
The company, which was formed from the merger of Linde AG (ETR:LING) and Praxair (NYSE:), derives about two-thirds of its revenue from long-term supply contracts, equipment rentals and steady industrial gas distribution, which UBS says offers stability even during periods of slower industrial demand.
Analyst Nathaniel Gabriel of UBS said Linde’s scale and dense distribution network help it retain and win customers, while its position in hydrogen and sustainability-linked projects could create additional upside.
Although volumes may remain soft near term, the broker expects strong operating leverage once demand improves.
Risks noted include exposure to economically sensitive merchant gas volumes, currency fluctuations and potential missteps in capital project execution.
The analyst placed Linde (NYSE:LIN) on a list of preferred industrial names, citing its ability to deliver double-digit earnings-per-share growth through cost optimisation and steady demand across a range of end markets.