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Air Products & Chemicals (NYSE:APD) and Linde (NYSE:LIN) both jump nearly 4% in Thursday's trading after Seaport Research upgraded both chemical companies to Buy from Neutral with respective $300 and $330 price targets.
Seaport's Michael Harrison cited Air Products' (APD) impressive built-in growth potential for the industrial gas business related to the energy transition - including hydrogen and carbon capture - and noted the company's $2.3B in new projects coming on stream in FY 2023, which can drive bottom-line growth even if industrial production slows.
Like Air Products, Linde (LIN) boasts built-in secular growth potential related to new project backlogs and the opportunity around clean energy, Harrison said; Linde has been more measured in its approach to hydrogen for mobility and carbon capture, but the company is looking at ~300 projects totaling $20B in potential capex, some of which could move forward in the next 12 months.
Seaport also upgraded Ecolab (ECL) and Sherwin Williams (SHW), while downgrading Entegris (ENTG), Huntsman (HUN) and Minerals Technologies (MTX) to Neutral from Buy.
"We think the entire group could trade lower as the full impact of higher interest rates and recessionary concerns are baked in, but we expect higher-quality and more defensive names to outperform," Harrison wrote.
Air Products (APD) is a "no-brainer bear market buy," Gen Alpha writes in an analysis published on Seeking Alpha.