Praxair to Expand Michigan Gas Pipeline, Shares Rise - Analyst Blog
Industrial gas producer and supplier Praxair Inc. PX recently announced that it will work toward enhancing its gas pipeline system in Detroit, MI. The expansion news lifted investors’ sentiments, leading to a 0.14% gain in the company’s share price on Jun 9.
As revealed, Praxair will build and operate a new air separation unit with a daily capacity of 1,650 tons. The new plant, equipped with state-of-the-art operating equipments and systems, will produce liquid oxygen, nitrogen, argon and rare gases. Using the increased supply, the company will cater to the needs of its customers in hospitals, food processors, and industrial companies.
Praxair expects the new air separation unit to become commercially operative in 2017. The company already owns and operates Michigan’s lone air separation plant and pipeline system, including five air separation units and one hydrogen production facility.
We believe such expansions will help Praxair satisfy the growing preference of customers for its world-class products and services. Also, increasing use of industrial gases in manufacturing, transportation, healthcare, food and beverages, and metal fabrication industries will prove to be a boon for industrial gas producers. In first-quarter 2015, the company had a solid backlog of $2.1 billion.
However, despite the contract-wins and bright prospects, certain near-term headwinds are weighing on Praxair’s performance. The stock currently carries a Zacks Rank #4 (Sell) with a market capitalization of $35.2 billion. The Zacks Consensus Estimate is pegged at $6.02 per share for 2015 and $6.66 for 2016.
Better-ranked stocks in the chemical diversified industry include Celanese Corporation CE, LyondellBasell Industries N.V. LYB and Stepan Company SCL, each sporting a Zacks Rank #1 (Strong Buy).
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PRAXAIR INC (PX): Free Stock Analysis Report
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