Air Products and Chemicals, the Basic Materials sector company, was revisited by a Wall Street analyst yesterday. Analyst Matthew DeYoe from Bank of America Securities maintained a Sell rating on the stock and has a $275.00 price target.
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Matthew DeYoe has given his Sell rating due to a combination of factors impacting Air Products and Chemicals. One significant concern is the increased capital expenditure for the Darrow project, which has risen to $8-$9 billion, excluding carbon sequestration costs. Although Yara International will contribute to the cost of the ammonia loop, this payment will occur after APD completes the construction, maintaining a high medium-term capital expenditure profile for the company. Additionally, the NEOM project presents considerable market price risks, as APD is responsible for marketing a large volume of green ammonia, a task for which it lacks experience.
Another factor influencing the Sell rating is the investor expectations surrounding potential project sales and share buybacks, which have not materialized as anticipated. Despite some positive developments, such as potential returns from the Darrow project, the opportunity cost and uncertainties regarding returns and execution risks remain. The NEOM project also poses challenges, with APD facing the primary price risk in what is expected to be an oversupplied market. These combined factors contribute to the underperformance of APD’s stock and justify the Sell rating.
According to TipRanks, DeYoe is a 3-star analyst with an average return of 7.8% and a 62.07% success rate. DeYoe covers the Basic Materials sector, focusing on stocks such as Corteva, Air Products and Chemicals, and DuPont de Nemours.