We currently maintain our Neutral recommendation on
). The company is a leading industrial gas producer and supplier
and has operations in North and South America, Europe and Asia.
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Long-term growth prospects are bright for Praxair especially in
the event of growing demand for industrial gases for use in
diverse industries, including hydrogen for refining; oxygen for
healthcare; and nitrogen and carbon dioxide for oil and gas
production. The company's year-to-date return is roughly 15.4%.
Also, customers' preference for Praxair's world class technology,
high quality products and gas supply services raises optimism for
solid earnings growth, going forward. Additionally, the company's
policy of returning value to shareholders through dividends,
share buybacks, strategic acquisitions, joint ventures and
long-term contracts are likely to bode well. Currently, we
anticipate earnings to grow 11.8% in the long run.
Despite the company's long-term growth opportunities, it is the
near-term concerns surrounding the stock that force us to
maintain a neutral stance on the stock. For 2013, strong growth
is anticipated from chemicals, energy and emerging markets.
However, accounting for the dilution due to pension settlement
charge expected in the third quarter 2013, management reduced the
high-end of its earnings guidance by $0.05. Sales guidance is
constant at $12 billion.
Due to high international exposure, Praxair faces risks arising
from foreign currency exchange rates, import and export controls,
and other economic, political and regulatory policies of local
governments. Also, increase in debt levels are expected to load
the company's financial burden and hence prove detrimental to the
The Zacks Consensus Estimate for Praxair is pegged at $5.95 for
2013 and $6.71 for 2014, representing year-over-year growth of
6.9% and 12.8%, respectively.
Others Stocks to Consider
Praxair currently has a market capitalization of $35.1 billion
and carries a Zacks Rank #2 (Buy). Other stocks to watch out for
in the industry are
Air Products & Chemicals Inc.
), each with a Zacks Rank #2 (Buy).