Cautious Hold on Air Products Amid Strategic Shift and Execution Risks

Analyst Vincent Andrews of Morgan Stanley maintained a Hold rating on Air Products and Chemicals (APD – Research Report), with a price target of $290.00.

Vincent Andrews has given his Hold rating due to a combination of factors influencing Air Products and Chemicals. The company is undergoing a strategic shift under the new leadership of CEO Eduardo Menezes, moving away from its traditional business model to a more cyclical commodity chemicals approach. While this transition is seen as a step in the right direction, it involves significant changes that are expected to take time to materialize, particularly in improving the company’s return on invested capital (ROIC).
Air Products’ stock is currently trading at the lower end of the projected range, reflecting a transition from an optimism phase to an execution phase. This shift is marked by investor caution due to larger-than-expected project write-downs and a substantial amount of capital expenditure that has yet to yield returns. Additionally, anticipated cost savings are projected to take longer than initially expected, further contributing to the Hold rating. These factors suggest that while the company is on a potentially positive trajectory, the risks and time required for substantial improvement justify a cautious approach.

According to TipRanks, Andrews is a 4-star analyst with an average return of 5.2% and a 63.16% success rate. Andrews covers the Basic Materials sector, focusing on stocks such as Mosaic Co, Sherwin-Williams Company, and Intrepid Potash.