Mizuho bullish on Air Liquide, sees 17% upside

Investing.com -- In a note to clients on Monday, Mizuho initiated coverage of Air Liquide with an Outperform rating and a 200 euro price target, implying 17% upside, describing the industrial gases group as a rare hybrid of recurring-revenue services and unregulated growth utility.

"Industrial gases have very LONG-cycle investments, but the SHORTest cycle sales as gases are hard to ship and store, so customers take delivery daily over short distances," analyst John Roberts wrote.

The analyst explained that large on-site customers operate under long-term take-or-pay contracts with cost pass-through, while merchant and packaged-gas customers generate recurring demand, supporting pricing power and resilient earnings through cycles.

Mizuho said self-help initiatives are lifting the earnings algorithm, with Air Liquide generating 497 million euros of efficiencies in 2024, 631 million euros in 2025 and a further 299 million euros in the first half of 2026.

Rising electronics exposure is increasingly driving growth, the firm added. The segment, at around 10% of sales, is expanding 8% to 9% and accounted for roughly half of the investment backlog in the first half, up from about 40%.

Mizuho flagged the Oct. 5 capital markets day as the next potential catalyst, expecting electronics to move to the forefront and margin improvement targets of at least 40 basis points a year beyond the 2027 goal of 21.8%.

The firm expects Air Liquide to keep narrowing the return-on-capital and valuation gap with peer Linde, also rated Outperform, noting the adjusted ROC gap has fallen to 6.7% in 2025 from 10% in 2021.

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