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Could Praxair’s New Business Wins Beat Analysts’ Estimates?

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Praxair’s revenue estimates

Analysts expect Praxair (PX) to post revenue of $2.70 billion in 3Q16. It implies an increase in projected revenue by 0.4% on a year-over-year basis. In the first two quarters of 2016, Praxair managed to beat  analysts’ revenue estimates. Can Praxair outperform analysts’ expectations in 3Q16?

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Revenue-boosting factors

Between June and September 2016, Praxair expanded its production capacity specifically in Europe. Below are few brief details of Praxair’s business wins along with other factors that could boost its revenues during 3Q16:

  • It acquired the remaining 34% stake in Yara International ASA’s European Carbon Dioxide business for an undisclosed amount. The unit catered to food and beverage industries. It generated 112 million euros in 2015.
  • Praxair increased prices to 15% on nitrogen, oxygen, argon, hydrogen, helium, and carbon dioxide effective July 15. The increase in price changes would impact the bulk industrial gas and medical gas customers in the US.
  • Praxair entered into a long-term agreement to purchase liquid helium with Polskie Górnictwo Naftowe i Gazownictwo SA—a leader in the Polish natural gas market and the only producer of helium in Central Europe.
  • Praxair acquired a 300-ton-per-day carbon dioxide (CO2) purification and liquefaction plant from PureCO2, located in Price, Utah. The plant serves customers from the end-market in food and beverage, metal fabrication, and water treatment. However, the financial terms weren’t disclosed.

ETF investment

Investors can indirectly hold Praxair by investing in the iShares U.S. Basic Materials ETF (IYM). IYM invested 6.3% of its holdings in Praxair. The fund’s other top holdings include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON). They have weights of 11.1%, 11.1%, and 8.3%, respectively, as of October 21, 2016.

In the next part, we’ll analyze Praxair’s expected net profit margins in 3Q16.

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