Market Overview

4 Reasons Why BMO Is Bullish On Air Products & Chemicals

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The industrial gas industry as a whole is well positioned to deliver solid performance and investors looking for exposure to the sector may want to consider Air Products & Chemicals, Inc. (NYSE: APD), at least according to BMO.

The Analyst

BMO Capital Markets' John McNulty initiated coverage of Air Products & Chemicals' stock with an Outperform rating and $195 price target.

The Thesis

Air Products & Chemicals is the fourth biggest industrial gas producer in the world. The company faces four key catalysts, which supports the bullish case for owning the stock.

The company boasts "significant" financial flexibility, the analyst wrote. In fact, the company has around $9 to $10 billion of financial flexibility it can "put to work" towards either large-scale projects, buying customer air separation units. The company could also return cash to shareholders although this ranks low on the priority list.

While still in its early days, there is sufficient reason to believe the Chinese market "turned the corner" and could see a low-to-mid single-digit pricing growth.

Air Products & Gamble as multiple large scale projects that are already in its pipeline, which should result in "sold earnings growth."

Finally, the pending merger between PX and Linde gives Air Products & Chemicals the opportunity to buy certain assets at reasonable prices. In fact, industry consolidation is a positive for the entire space as it usually results in increased discipline.

Price Action

Shares of Air Products & Chemicals were trading around $158.

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Latest Ratings for APD

DateFirmActionFromTo
Nov 2019Initiates Coverage OnHold
Nov 2019MaintainsOverweight
Nov 2019MaintainsOutperform

View More Analyst Ratings for APD
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets China gas Industrial Gas James McNultyAnalyst Color Initiation Analyst Ratings

 

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