On Thursday, CFRA raised the price target for Air Liquide (EPA:AIRP) SA (AI:FP) (OTC: OTC:AIQUY) shares, a leader in the industrial gas market, from EUR200.00 to EUR218.00, while maintaining a Buy rating on the stock. The revision reflects a positive outlook on the company's robust market position and anticipated improvements in profit margins.
The firm's analyst highlighted Air Liquide's premium valuation, with a forward price-to-earnings (P/E) ratio of 30 times for 2024, above its historical average of 24 times.
This premium is considered warranted due to the company's strong standing in the industrial gas sector and the expectation of better margins. The optimism comes as the global manufacturing Purchasing Managers' Index (PMI) has shown three consecutive months of improvement in 2024.
Air Liquide's updated strategic plan is aimed at increasing its operating margin by 320 basis points by 2025. The company has provided guidance for a compound annual growth rate (CAGR) in sales of 5%-6% and a return on capital employed of over 10%, aligning with CFRA's projections.
For the mid-term, CFRA anticipates that Air Liquide will achieve mid-to-high single-digit revenue growth and an above-proportional increase in earnings before interest and taxes (EBIT) for both 2024 and 2025. The firm has retained its earnings per share (EPS) estimates for Air Liquide at EUR7.20 for 2024 and EUR7.80 for 2025, supporting the positive stance on the stock's future performance.
InvestingPro Insights
With CFRA's recent price target increase for Air Liquide SA, investors are closely monitoring the company's financial health and market position. According to InvestingPro data, Air Liquide has a market capitalization of $105.73 billion and is trading at a P/E ratio of 29.27 based on the last twelve months as of Q4 2023. Despite a revenue decline of 7.77% during the same period, the company maintains a strong gross profit margin of 59.62%, indicating efficient cost management.
InvestingPro Tips highlight Air Liquide's track record of raising dividends, with the company having done so for the past 33 years. This is a testament to its financial stability and commitment to shareholder returns. Additionally, while the stock is trading at a high P/E ratio relative to near-term earnings growth, it is worth noting that Air Liquide is a prominent player in the Chemicals industry with low price volatility, which may appeal to investors seeking a more stable investment in this sector.
For investors looking to delve deeper into the company's financials and future prospects, there are a total of 14 InvestingPro Tips available at https://www.investing.com/pro/AIQUY. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights and analysis that could help in making informed investment decisions.
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