Investing.com -- Bernstein upgraded Air Products and Chemicals Inc (NYSE:APD) to "Outperform" and raised its price target to $375 from $290 given an improved strategic direction under new leadership following investor-backed board changes.
The industrial gas major has faced setbacks due to its ambitious clean hydrogen investments and operational missteps, losing the reliability that typically defines the sector, Bernstein said. However, with former Praxair (NYSE:) executives Dennis Reilly and Eduardo Menezes set to lead, the firm expects APD to refocus on its core industrial gas business while bringing greater transparency and cost discipline to its large-scale projects.
“We believe well run industrial gas majors have the highest earnings quality and predictability in chemicals and warrant the highest valuation,” analyst at Bernstein said.
“We see the potential for APD to rebuild that dependability, which based on its mix should be the amongst highest of the majors, and unlock value from its mega-projects”
While challenges remain in optimizing returns from megaprojects, Bernstein sees potential for margin expansion and long-term value creation, positioning APD to regain investor confidence.
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