Ahead of the Bell: Airgas upgraded to 'Overweight'

Airgas upgraded to 'Overweight' on signs of industry improvement, 2nd-quarter results

• On 9:10 am EST, Monday November 2, 2009

NEW YORK (AP) -- Airgas Inc. is well-positioned to gain from an economic recovery given improved non-tech industrial production, expectations for rising prices and its strong second-quarter results, said an analyst on Monday as he upgraded the industrial gas producer's stock.

First Analysis Securities analyst Michael Harrison lifted his rating to "Overweight" from "Equal Weight" with a $58 price target. Harrison believes volumes have bottomed and margins are set to widen going forward.

"Non-tech industrial production showed slower declines in the September quarter, and this key leading indicator would turn year-over-year positive by the March 2010 quarter even if industrial production stays at September levels," he explained.

As demand stabilizes, "broad-brush price hikes" are likely, Harrison said, noting that a growing number of independent packaged gas distributors expect higher prices over the next three months, according to a First Analysis Securities survey.

"We also believe an economic recovery could lead to increased acquisition activity, suggesting further top-line and margin upside for Airgas," Harrison said.

Airgas shares closed at $44.36 Friday.