Air Products and Chemicals Faces Challenging Outlook: Analyst Reiterates Sell Rating Amidst Project Hurdles and Market Headwinds

Bank of America Securities analyst Salvator Tiano has reiterated a Sell rating on Air Products and Chemicals with a price target of $275.00, citing challenging macroeconomic conditions, limited supportive factors, and hurdles with certain projects. The company faces headwinds such as a decline in helium prices and flat sales in Asia, contributing to downward revisions in earnings expectations for 2025. Tiano has a 46.15% success rate and an average return of -7.6%.

Air Products & Chemicals Inc. (NYSE:APD) reported mixed results for the third quarter of fiscal 2025, with earnings per share (EPS) exceeding estimates but facing headwinds from macroeconomic conditions and project-related challenges. The company's adjusted EPS of $3.09 was above the $2.98 estimate, while GAAP EPS rose to $3.24, up 4% year-over-year. Sales totaled $3.02 billion, beating the $2.96 billion estimate [1].

Third-quarter sales increased 1% year-over-year, driven by higher energy cost pass-through, favorable pricing, and currency impacts. However, these factors largely offset declines from the September 2024 LNG business sale, lower global helium demand, and previously exited projects. Adjusted operating income remained flat at $741 million, reflecting strong base business performance despite portfolio adjustments.

Regional sales varied significantly. Americas sales rose 2% to $1.3 billion, but operating income dropped 4% to $374 million, with margins falling 200 basis points to 29.7%. In Asia, sales increased 3% to $810 million, with operating income growing 8% to $217 million, and margins improving by 150 basis points to 26.8%. Europe’s sales surged 11% to $771 million, with operating income rising 10% to $225 million, though margins slipped slightly to 29.2%.

The company announced an additional $24.1 million (7 cents per share) charge in the third quarter for ongoing clean energy project exits, following a $2.9 billion charge in the second quarter. Additionally, costs related to a proxy contest with Mantle Ridge amounted to $25.0 million (8 cents per share), partially offset by gains from asset sales.

Bank of America Securities analyst Salvator Tiano reiterated a Sell rating on Air Products with a price target of $275.00, citing challenging macroeconomic conditions, limited supportive factors, and hurdles with certain projects. Tiano noted a decline in helium prices and flat sales in Asia, contributing to downward revisions in earnings expectations for 2025 [2].

Air Products expects adjusted EPS to be between $11.90 and $12.10 for the full year 2025, and between $3.27 and $3.47 for the upcoming fourth quarter. The company continues to project approximately $5 billion in capital expenditures for fiscal 2025.

APD shares are trading lower by 1.09% to 287.21 at Thursday’s last check.

References:
[1] https://www.inkl.com/news/air-products-trims-earnings-outlook-on-portfolio-optimization-and-project-exits
[2] https://www.inkl.com/news/bank-of-america-analyst-reiterates-sell-rating-on-air-products