On Wednesday, Mizuho Securities adjusted its outlook on Air Products (NYSE:APD) & Chemicals Inc. (NYSE:APD) shares, raising the price target to $360 from the previous $308. The firm kept its Outperform rating on the stock. The adjustment follows the announcement that activist investor Mantle Ridge has acquired a $1 billion stake in the industrial gas supplier, representing nearly 2% of the company.
The investment by Mantle Ridge is notable due to its history with Air Products, including involvement in the 2013 campaign led by Pershing Square that resulted in Seifi Ghasemi becoming Chairman and CEO of the company. Mizuho's analysis included an estimate of Air Products' investment breakdown, highlighting the significance of projects in backlog. These projects are expected to account for about 40% of the company's undepreciated capital in the coming years.
Mantle Ridge's track record with companies such as CSX (NASDAQ:CSX), Aramark, and Dollar Tree (NASDAQ:DLTR) has been associated with campaigns that aim to enhance shareholder value. The firm's recent move to take a stake in Air Products has been interpreted as a potential catalyst for value creation. Mizuho suggests that this could help narrow the valuation gap between Air Products and its industry peer Linde (NYSE:LIN).
The price target increase reflects Mizuho's confidence that the involvement of Mantle Ridge could lead to positive changes at Air Products. The firm anticipates that these changes could have a beneficial impact on the company's financial performance and market valuation.
In other recent news, Air Products & Chemicals Inc. has experienced a series of upgrades and price target raises from various analysts. Jefferies upgraded the stock from Hold to Buy, setting a new price target at $364. This was echoed by Evercore ISI, which raised the rating from In Line to Outperform and increased the price target to $365. Moreover, BMO Capital maintained an Outperform rating for the company with a price target of $323, while Citi increased its price target to $345, keeping a Buy rating.
These adjustments are a result of recent developments within the company. Air Products & Chemicals reported strong third-quarter earnings, exceeding expectations with an adjusted EPS of $3.20. The company has also moved forward with significant clean hydrogen initiatives, including securing a green hydrogen supply agreement with TotalEnergies (EPA:TTEF) and planning to sell its LNG technology and equipment business to Honeywell (NASDAQ:HON).
Analysts from Jefferies, Evercore ISI, BMO Capital, and Citi have expressed confidence in the company's strategic direction, particularly in light of the stake acquired by investment firm Mantle Ridge. This development is seen as a potential catalyst for strategic shifts within the company, which could enhance shareholder returns and improve the overall growth narrative.
These recent developments highlight a period of significant activity for Air Products & Chemicals, positioning the company for potential growth. However, it's important to note that these are analyst expectations and the actual outcomes may vary.
InvestingPro Insights
Air Products & Chemicals Inc. (NYSE:APD) has been demonstrating strong financial performance and market positioning, as evidenced by recent InvestingPro data. The company's market capitalization stands at an impressive $69.0 billion, reflecting its significant presence in the industrial gas sector.
InvestingPro Tips highlight APD's commitment to shareholder value, noting that the company has raised its dividend for 41 consecutive years and maintained dividend payments for 54 consecutive years. This consistent dividend policy aligns well with Mantle Ridge's focus on enhancing shareholder returns, as mentioned in the article.
The stock's recent performance has been particularly robust, with InvestingPro data showing a 22.58% price total return over the past three months and a 31.17% return over six months. This upward trajectory supports Mizuho's bullish outlook and increased price target.
It is worth noting that APD is trading near its 52-week high, with a price that is 99.16% of its 52-week peak. This strength in share price, combined with the activist investor interest, could indeed serve as a catalyst for further value creation, as suggested in the article.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 10 more tips available for Air Products & Chemicals Inc.
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