On Wednesday, Jefferies made a notable adjustment to the stock rating and price target of Air Liquide (EPA:AIRP) SA (AI:FP) (OTC: OTC:AIQUY), shifting from an 'Underperform' to a 'Buy' status and increasing the price target to €190 from €151. The revision reflects a positive shift in the firm's perspective of the industrial gas company's financial prospects.
The upgrade was supported by a modest increase in average EBIT forecasts, coupled with a valuation boost attributed to a reduction in the assumed discount relative to peers and an upward adjustment in discounted cash flow (DCF) terminal value growth expectations.
The analyst anticipates that Air Liquide will experience higher real pricing, which has been a key factor in the firm's decision to enhance the stock's rating and price target.
Air Liquide's ability to maintain industry pricing discipline even during inflationary periods was highlighted as a critical element of the company's resilience. The analyst expressed confidence that real price increases are likely to continue, which should sufficiently counterbalance any potential weaknesses in volume.
The enhanced price target and rating upgrade also led to Air Liquide's inclusion in Jefferies' Franchise Picks, a select group of stocks expected to perform well. This endorsement underscores the firm's improved outlook on Air Liquide's market position and future earnings potential.
In other recent news, Air Liquide has been the focus of Citi's positive outlook. The investment firm has raised its price target for the industrial gas company's shares to €201 from €190, maintaining a Buy rating. The adjustment reflects Citi's belief in Air Liquide's potential for significant margin growth and robust growth prospects.
Citi's analysis suggests that Air Liquide could achieve margins comparable to its U.S. counterparts, indicating a possible upside of over 75% to the current share price.
Citi also anticipates around a 20% total shareholder return by the end of next year, an attractive proposition for a company seen as high-quality and defensively positioned for growth. The firm has also increased its earnings before interest and taxes estimates for Air Liquide for 2024 and 2025 by 1% and 3% respectively. These recent developments highlight the positive sentiment surrounding Air Liquide's future performance.
InvestingPro Insights
In line with Jefferies' upgraded outlook on Air Liquide SA, InvestingPro data and tips offer additional context to the company's financial position and market performance. Air Liquide's market capitalization stands at $18.36 billion, reflecting its significant presence in the chemicals industry. The company's P/E ratio (adjusted) of 27.16 for the last twelve months as of Q2 2024 suggests that investors are willing to pay a premium for its shares, aligning with the "InvestingPro Tip" that Air Liquide is trading at a high earnings multiple.
Supporting Jefferies' positive view on Air Liquide's pricing power and financial stability, an "InvestingPro Tip" highlights that the company has maintained dividend payments for 33 consecutive years. This long-standing dividend history, coupled with a current dividend yield of 1.36%, underscores Air Liquide's commitment to shareholder returns even during challenging economic periods.
Furthermore, Air Liquide's revenue for the last twelve months as of Q2 2024 was $28.93 billion, with a gross profit margin of 61.54%. These figures, along with the "InvestingPro Tip" indicating that analysts predict the company will be profitable this year, support the notion of Air Liquide's strong market position and financial health.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide deeper insights into Air Liquide's investment potential.
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