UPDATE: Deutsche Bank Reiterates Buy Rating, Raises PT on Praxair on NuCO2 Acquisition
In a report published Wednesday, Deutsche Bank reiterated its Buy rating on Praxair (NYSE: PX), and slightly raised its price target from $124.00 to $125.00.
Deutsche Bank noted, “Full but fair price at 9.6x '13E EBITDA. $0.10-plus accretive in '14E. Buy. We believe Praxair's acquisition of NuCO2 for $1.1B, or 9.6x '13E EBITDA, is sound as i) it is a strong strategic fit given Praxair's own competencies in distribution, logistics and productivity (not to mention Praxair is a supplier of CO2 to NuCO2), ii) the EBITDA multiple while full, is fair, given NuCO2's market leadership in US carbonation and robust (46%) EBITDA margins and iii) the midt-eens IRR for the acquisition is in-line with Praxair's large project backlog. While one-time costs will limit accretion to ~$0.02 in '13E, we estimate NuCO2 will be $0.10-plus, or 2%, accretive in '14. With 10%-plus EPS growth resuming in '14E and valuation an attractive 18.4x '13E EPS, Buy.”
Praxair closed on Tuesday at $110.58.
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