On Tuesday, UBS analyst Joshua Spector increased the price target for Air Products & Chemicals Inc. (NYSE:APD) to $385 from the previous $375 while sustaining a Buy rating for the stock. Spector highlighted a range of positive catalysts anticipated to bolster investor confidence in the company's earnings, growth, and execution capabilities.
Air Products, a leading industrial gases company generating $12.1 billion in revenue, has been the subject of attention due to the recent board refresh, which Spector believes supports the likelihood of structural changes being implemented within the company. The analyst's optimism is further supported by the expectation that the company's guidance for fiscal year 2025 earnings per share (EPS) is conservative, with current diluted EPS standing at $17.24. Spector has adjusted his EPS growth forecast to a compound annual growth rate (CAGR) of approximately 15% for the period from fiscal year 2025 to 2029, which is now 8% above the consensus. Notably, InvestingPro data shows the company has maintained dividend payments for 55 consecutive years, demonstrating strong financial stability.
The UBS analyst's revised fiscal year 2026 earnings estimate comes in the wake of preliminary results from a shareholder vote, which indicated that three out of the four board candidates proposed by activist investor Mantle Ridge were elected. With these election results and additional new board members nominated by the company, the composition of the board has seen a significant shift, with five out of the nine directors being new.
The changes in the board are expected to play a crucial role in the company's strategic direction moving forward. According to Spector, as investors gain confidence in Air Products' strategic plans and execution, there is potential for the company's valuation to realign closer to that of its industry peers.
Air Products & Chemicals Inc. is known for its focus on providing atmospheric, process, and specialty gases, as well as the equipment that processes them. The company's performance and strategic decisions are closely watched by investors and analysts alike as indicators of its future growth and market position.
In other recent news, Air Products & Chemicals Inc. reported robust preliminary earnings for the first quarter of fiscal year 2025, exceeding both the company's guidance and analyst consensus with an adjusted earnings per share (EPS) of $2.86. The company also announced a CEO succession plan, expecting to appoint a new President by the end of March 2025, followed by a new CEO within three months. Barclays (LON:BARC) analysts upgraded the company's stock rating from Equalweight to Overweight, reflecting their confidence in the company's position in the industrial gas sector and its core operations.
In addition to these developments, Air Products' shareholders elected nine directors to the company's board amid a contested election with Mantle Ridge LP, an investment firm. Mantle Ridge nominees Paul Hilal, Andrew Evans, and Dennis Reilley secured seats on the board. Interestingly, Mantle Ridge Capital Management was successful in securing three seats on the nine-member board of Air Products, concluding a highly contested board dispute.
These recent developments indicate significant changes within the company's leadership and promising financial performance. As always, investors are encouraged to consider these earnings and revenue results as key indicators of the company's financial health.
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