Goldman Sachs is out with its near-term forex outlook
Investing.com -- RBC Capital Markets initiated coverage on Linde (NYSE:LIN) Plc (ETR:LIN) with an “outperform” rating and a $576 price target, implying a 22.4% upside from the stock’s last close at $470.53.
The brokerage cited the industrial gas giant’s consistent earnings growth, strong capital return program, and a $10.4 billion project backlog as key supports for the stock.
Analysts value Linde at 32 times their 2026 earnings per share estimate of $18. That multiple sits at the high end of Linde’s historical P/E range of 20x to 33x and reflects the company’s double-digit EPS growth profile. Linde has posted a roughly 16% EPS compound annual growth rate since 2019.
Despite weak industrial volumes, Linde has grown earnings through steady price increases.
The company has delivered low- to mid-single-digit pricing gains on largely flat volumes over several years, expanding EBITDA margins from 18.7% in 2019 to 29.4% in 2024.
Around 25% of revenue is tied to on-site supply agreements, which come with higher upfront investment but lower cost per unit, supporting pricing power and long-term contracts.
The company’s backlog includes only projects that are earnings-accretive, supported by take-or-pay contracts, cost pass-through clauses, or cancellation fees.
RBC sees this backlog, along with stable demand in end markets like healthcare and electronics, as a buffer against macroeconomic uncertainty.
Linde expects a 2025 FX headwind of about 2%, down from earlier estimates of 4%, and has maintained its EPS guidance midpoint of $16.35 for the year.
That compares to consensus estimates of $16.40. The company’s second-quarter EPS guidance is $3.95 to $4.05, versus consensus at $4.02.
Linde has prioritized capital allocation to shareholder returns and project growth. Since 2021, the company has repurchased $4 billion to $5 billion in stock annually.
RBC expects at least $4 billion in buybacks this year, equal to roughly 1.8% of shares outstanding. Linde also maintains low financial leverage, with net debt to EBITDA below 2x since 2020.
Capital expenditures are rising, driven by growth projects, with 2025 capex guided between $5 billion and $5.5 billion.
RBC views this increase as a positive sign of investment in stable, long-term returns. About 60% of 2024 capital deployment was returned to shareholders via dividends and buybacks.
RBC sees Linde’s large scale, cost advantages, and global infrastructure as key competitive differentiators in a commoditized industry.
The brokerage believes these strengths support premium valuation relative to peers and other specialty chemical companies.
The analysts estimate Linde’s 2025 EPS at $16.35 and 2026 EPS at $18, slightly ahead of the $17.94 consensus. Linde’s valuation currently stands at 28.8x 2025 earnings and 26.1x for 2026.
RBC’s valuation implies potential upside to $662 in a bullish case and downside to $428. The brokerage said Linde’s stability, pricing model, and project pipeline make it a defensive option in the chemicals sector.