We currently maintained a Neutral recommendation on
) based on its impressive long-term opportunities, offset by
near-term headwinds surrounding it.
The industrial gas producer and supplier is one of the leading
companies having operations in North and South America, Europe
and Asia. Industrial gases are being increasingly used for
various purposes across diverse industries, including hydrogen
for refining; oxygen for healthcare; and nitrogen and carbon
dioxide for oil and gas production.
Demand for Praxair's products is ever on the rise with backlog
reaching $2.6 billion at the end of year 2012. This signifies
preferences among customers for the company's world class
technology, high quality products and gas supply services.
Also, the company remains focused on developing new products
and applications, and innovative production and distribution
techniques. Returning values to shareholders through dividends
and share buybacks is an attractive feature of the company.
Despite these long-term aspects, it's the near-term headwinds
that keep us on the sidelines for the company. Flat revenue in
the fourth 2012 as price and acquisition gains get offset by a
negative foreign currency translation, was disappointing.
Geographically, business was weak, especially in South America
and Europe while some signs of strength were witnessed in Asia
and North America.
For the first quarter 2013, difficult business conditions in
European markets, holiday shutdowns in Asia and Brazil are likely
to curtail revenue generation in these regions. To add to the
peril, the company faces difficulties emanating from negative
foreign currency translation and higher interest and pension
Near-term concerns and fourth quarter 2012 results had an
impact on earnings estimates for the company. The Zacks Consensus
Estimate for 2013 has gone down by 2.8% to $5.99 (10 of 12
estimates were revised downwards) and for 2014 the estimate has
plummeted 1.9% to $6.80 (6 of 13 estimates were lowered) in the
last 7 days.
Others Stocks to Consider
Other stocks to watch out for are
), both holding a Zacks Rank #1 (Strong Buy), and
Air Products & Chemicals Inc.
) with a Zacks Rank #2 (Buy).
AIR PRODS & CHE (APD): Free Stock Analysis
(ARKAY): ETF Research Reports
BASF SE (BASFY): Free Stock Analysis Report
PRAXAIR INC (PX): Free Stock Analysis Report
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