On Tuesday, Citi increased its price target for Air Liquide (OTC:AIQUY) SA (Euronext Paris: AI) (OTC: AIQUY) shares to €201 from the previous €190, while maintaining a Buy rating on the stock. The adjustment reflects Citi's optimistic outlook on the industrial gas company's potential for significant margin improvement and strong growth prospects.
According to Citi, Air Liquide presents a compelling investment opportunity due to the combination of its margin enhancement potential and superior growth outlook. The firm suggests that the market may not fully appreciate the upside that could arise from margin improvements. Citi's analysis points to a scenario where Air Liquide could achieve margins comparable to its U.S. counterparts, implying a greater than 75% upside to the current share price.
Citi's base case anticipates approximately a 20% total shareholder return (TSR) by the end of the next year, which is considered attractive for a company characterized as high-quality and defensively positioned for growth. The firm also notes that the upcoming U.S. election could diminish uncertainty around the energy transition and potentially lead to new project announcements, providing further support for Air Liquide's stock.
In anticipation of these developments, Citi has added a positive Short-Term View on Air Liquide's shares. The firm has also increased its estimates for Air Liquide's earnings before interest and taxes (EBIT) for the years 2024 and 2025 by 1% and 3%, respectively, which contributed to the decision to raise the price target.
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