Air Liquide shares up 2.09% on analysts' reviews

02 March 2007 11:24  [Source: ICIS news]

LONDON (ICIS news)--Air Liquide’s share price rose by 2.09% on Friday after analysts raised their target price for the company on good 2006 results and the management’s upgrade of its five year outlook.

UBS raised its target share price for Air Liquide by 4% to €187 ($246), while equity researchers ING upped its 12 month target share price by €11 to €181.

Air Liquide’s share price was at €172.24 at 09:30 GMT, up 2.09% from the previous close.

The upgrade reflected in part better free cash flow and debt but a higher pension deficit, UBS’ analysts said in a note to clients.

"The remainder reflects average estimate increases of 6% offset by €2bn in additional funding costs for new earnings growth," they added.

Air Liquide on 25 Juanuary posted a 4.4% year-on-year rise in fourth quarter revenue to €2.8bn due to strong growth in Asia. Revenue for its gas and services in the quarter rose 5.2% to €2.4bn.

"Air Liquide recently gave a strong five year outlook and we take this opportunity to revise our forecasts in the light of this," said the ING analysts.

They added that the company’s optimism was based on a reinforced presence in Asia and a strong increase in its pipeline of projects.

It aims to grow revenues between 2007 and 2011 by 8-10% per annum, leading to growth in net income of 10-13% a year.

"The 2007 outlook is for double-digit growth in net income. Although not too far from consensus next year, it is to be sustained over a five year period, not just one to two years. This is despite concerns of a slowdown for the chemicals industry; we view these targets as positive," the ING analysts said.

The company’s management has become specific as to how to revitalise growth in air gases by aggressively exploiting four new markets for coal/gas-to-clean energy conversion, UBS said.

"Wins for over-the-fence O2 (oxygen) supply for power companies could be transformational for large industries. Thus the stock may finally have what it recently lacked," the analysts said.

"We think the underperformance year-to-date of the stock as well as directly after the results release is somewhat harsh and occurs as management is clearly stepping up its effort in making Air Liquide’s vision and how it plans to achieve milestones towards accelerated growth more transparent to financial markets."

UBS kept the rating for the firm unchanged at Neutral 1 while ING maintained its Hold rating for the French industrial gases company.

($1 = €0.76)

By: Hilde Ovrebekk
+44 20 8652 3214

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