Air Liquide: excessively discounted, Credit Suisse upgrades
(CercleFinance.com) - Credit Suisse is now a buyer of the share of French industrial and medical gas group Air Liquide, a competitor of Linde and Air Products.
Previously a seller ("underperformance"), analysts have directly upgraded their rating to buy ("outperform"), having upgraded their target price from 116 euros to 140 euros, which means upside potential of around 14%
The first argument is a divergence of performances. Credit Suisse calculates that since the beginning of the year, Air Liquide shares have underperformed those of Linde and Air Products by 17% and are now trading at a discount of 19% relative to their sector in terms of EV/EBITDA. According to analysts, this is the highest discount in ten years, considering that it has historically been around 5%. Given the quality of Air Liquide's interim results, this is "unjustified," the broker says in its note.
Basically, we read, the sector is being driven by its recent concentration, which reinforces the pricing power of the remaining players. There is also a decline in capex by major players, which could be expected to continue with increasing load factors at factories. Finally, the value of industrial and medical gases should be defensive in an uncertain market environment.
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