On Wednesday, Mizuho Securities adjusted its price target on shares of Air Products (NYSE:APD) & Chemicals Inc. (NYSE:APD), a leading industrial gases company, to $286 from the previous target of $295. Despite the reduction, the firm maintains a Buy rating on the stock.
The adjustment was made following the company’s guidance for the June 2024 quarter, which indicated an adjusted earnings per share (EPS) midpoint of $3.03, below the Morgan Stanley USA estimate and Bloomberg consensus of $3.29 and $3.30, respectively.
For the September 2024 quarter, the implied EPS guidance is approximately $3.75, compared to the Morgan Stanley USA estimate and consensus of $3.59 and $3.48, respectively.
Air Products & Chemicals reported that its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the March 2024 quarter increased by 4% to $1.2 billion, outperforming the Morgan Stanley USA estimate and consensus, which were $1.17 billion and $1.18 billion, respectively. This was achieved despite a 2% decrease in volume.
The company’s project backlog, primarily focused on hydrogen and energy transition, was reported at $19.3 billion, a slight decrease from $19.6 billion in December 2023. Mizuho highlighted that lower gas prices could diminish the value of efficiency gains in hydrogen production, which is Air Products & Chemicals' largest business segment.
Mizuho confirmed that there has been no change to the annual EPS estimates for Air Products & Chemicals. The revised price target reflects a slightly lower multiple applied by the firm.
InvestingPro Insights
Recent data from InvestingPro shows that Air Products & Chemicals Inc. (NYSE:APD) holds a market capitalization of $52.54 billion, with a P/E ratio currently standing at 21.53. Despite recent market challenges, the company has maintained a strong dividend history, increasing its dividend for an impressive 41 consecutive years, and has kept up dividend payments for over half a century.
This commitment to shareholder returns aligns with the positive sentiment from analysts, who predict that APD will remain profitable this year.
InvestingPro Tips highlight that while the company is facing headwinds with analysts revising earnings downwards for the upcoming period, APD's long-term profitability track record remains intact, having been profitable over the last twelve months. Still, it is worth noting that the company is trading at a high P/E ratio relative to near-term earnings growth, which suggests a premium valuation compared to immediate growth prospects.
For investors seeking more comprehensive analysis and additional insights, there are more InvestingPro Tips available, which can further inform investment decisions for Air Products & Chemicals. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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