Analyst Note| Krzysztof Smalec, CFA |
Air Products’ fiscal third-quarter adjusted EPS decreased 7% from the prior-year period, as management estimates that COVID-19 had a roughly $0.35 to $0.40 negative impact on earnings. Despite near-term headwinds, we think Air Products’ solid results highlight the resilience of the firm’s business model, as on-site sales have held up well and merchant pricing remains strong. We are raising our fair value estimate to $305 from $246, which reflects more optimistic long-term revenue growth projections. We have raised our stage II EBI growth rate assumption as we believe that Air Products has a long runway for growth fueled by its capital deployment plan and continued strong execution.