On Tuesday, Wells Fargo (NYSE:WFC) analyst Michael Sison raised the stock price target for Air Products & Chemicals Inc. (NYSE:APD) to $350 from the previous target of $330. Accompanying this adjustment, Sison upgraded the stock's rating to Overweight from Equal-weight.
The new price target is based on a forward-looking Enterprise Value to EBITDA (EV/EBITDA) multiple of 16.0 times, centered on the company's fiscal year 2025 estimates. This valuation reflects the anticipated positive changes in the company's operations and strategic direction.
InvestingPro's comprehensive analysis indicates the stock is currently trading above its Fair Value, with a "GOOD" overall financial health score. Subscribers can access detailed valuation metrics and 6 additional ProTips for deeper insights into APD's investment potential.
InvestingPro's comprehensive analysis indicates the stock is currently trading above its Fair Value, with a "GOOD" overall financial health score. Subscribers can access detailed valuation metrics and 6 additional ProTips for deeper insights into APD's investment potential.
The upgrade thesis hinges on the belief that most shareholders are in favor of change at Air Products. The AGM will determine the leadership to steer this change. Post-AGM, Air Products is expected to demonstrate high-quality execution and a more transparent growth algorithm, aligning with investor expectations for the industrial gas sector.
Sison also forecasts that the company's mega projects currently in its backlog will face fewer risks moving forward. Moreover, he predicts an acceleration in cost savings, a reduction in headcount, and future projects that are more reflective of traditional industrial gas business models. These improvements are expected to contribute to the company's growth trajectory.
The new price target is based on a forward-looking Enterprise Value to EBITDA (EV/EBITDA) multiple of 16.0 times, centered on the company's fiscal year 2025 estimates. This valuation reflects the anticipated positive changes in the company's operations and strategic direction.
In other recent news, Air Products and Chemicals (NYSE:APD), Inc. has reported a 13% year-over-year increase in adjusted earnings per share for Q4 2024, aligning with their guidance. For fiscal year 2025, the company anticipates an EPS growth of 6% to 9%, despite selling its LNG business to Honeywell (NASDAQ:HON).
Analysts at Mizuho (NYSE:MFG) and BMO Capital have maintained their Outperform ratings on Air Products, adjusting their price targets to $385 and $350 respectively. The company is also focused on executing a two-pillar growth strategy and a CEO transition by March 31, 2025.
However, activist investors Mantle Ridge and D.E. Shaw have expressed dissatisfaction with the company's governance, specifically criticizing the handling of CEO succession planning. Both firms have proposed changes in the board's composition at the upcoming 2025 Annual Meeting.
In response, Air Products' board has recommended shareholders vote for its slate of director nominees. The company continues to focus on the emerging clean hydrogen market, with multiple projects in progress, including a 15-year contract to provide TotalEnergies (EPA:TTEF) with green hydrogen starting in 2030. These are recent developments in the company's operations.
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