Allentown, Pennsylvania-based Air Products and Chemicals, Inc. (APD) is a leading industrial gas company providing atmospheric gas, process and specialty gas, equipment, and related services. With a market cap of $72.9 billion, Air Products’ operations span the Americas, Indo-Pacific, Europe, and the Middle East.
Air Products has lagged behind the broader market over the past year. Air Products’ stock prices are up 19.8% on a YTD basis and 21.5% over the past 52 weeks, lagging behind the S&P 500 Index’s ($SPX) surge of 24.1% in 2024 and 31.1% over the past 52-week period.
However, Air Products has outperformed the Materials Select Sector SPDR Fund’s (XLB) 7.2% gains on a YTD basis and 14.2% returns over the past year.
Air Products stock rose nearly 2% after the release of its impressive Q4 earnings on Nov. 7. Although its sales remained flat at $3.2 billion compared to the year-ago quarter, the 1% increase in volumes and prices each were offset by 2% lower energy cost pass-through, it reported robust improvement in profitability. The company reported an industry-leading adjusted EBITDA margin of 44.1%, translating into a robust 11.7% year-over-year growth in adjusted EBITDA, reaching $1.4 billion. Moreover, its adjusted net income surged by a staggering 12.9% year-over-year, totaling $792.8 million. Meanwhile, its adjusted EPS of $3.56, surpassed analysts’ bottom-line estimates by a notable 3.5%, bolstering investor confidence.
Air Products also completed the strategic divestiture of its LNG business at the end of September, demonstrating its commitment to the core industrial gas business while providing clean hydrogen at scale to serve significant demand in the heavy transportation and industrial sectors. Meanwhile, the company has continued to generate strong and steady cash flow that supports disciplined capital allocation. Moreover, it expects to carry out humongous capital expenditures in fiscal 2025 ranging between $4.5 billion and $5 billion.
For the fiscal year, ending in September 2025, analysts expect APD to report a 3.1% year-over-year growth in adjusted EPS to $12.81. The company’s earnings surprise history is mixed. It has surpassed analysts’ EPS estimates in three of the past four quarters while missing on another occasion.
APD has a consensus “Moderate Buy” rating overall. Among the 21 analysts covering the stock, 12 recommend “Strong Buy” and nine advise a “Hold” rating.
This configuration is more bullish than three months ago, with nine “Strong Buy” ratings on the stock.
On Nov. 18, UBS Group AG (UBS) analyst Joshua Spector upgraded APD to a “Buy” while raising the price target to $375, suggesting a potential upside of 14.3%.
APD’s mean price target of $337.90 represents a premium of only 3% to the current price levels. The Street-high price target of $385 suggests a potential upside of 17.4%.
