Piper Jaffray Initiates Coverage on Airgas (ARG) with a Buy; See Compelling Earnings Power Potential
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Piper Jaffray & Co. initiates coverage on Airgas Inc. (NYSE: ARG) with a Buy. Price target $54.
Piper analyst says, "We are initiating coverage of ARG at Buy as we believe the stock is pricing in the current economic downturn and underestimating the earnings power of transformational changes underway at Airgas. Based on our scenario analysis, we see upwards of $0.75 in EPS accretion over the next 3 years (absent an economic recovery) derived from (1) an improving customer and product mix – less cyclical, niche customer segments and higher margin gas/rent; and (2) improved margin leverage in the gas/rent segment."
"Cost reduction efforts and opportunities for tuck-in acquisitions to expand its core business, support earnings growth as macro headwinds eventually moderate. While we believe consensus estimates may prove to be aggressive, we believe ARG is attractively valued on our expectations, and trading at 15.8x our FY10 EPS estimate vs. its historical average forward multiple of 18x."
To see more analyst ratings on ARG Click Here.
Airgas, Inc. and subsidiaries (Airgas) is a distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods, such as welding equipment and supplies. [SM]
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