Air Products increases gas prices
On June 22, Air Products and Chemicals (APD) announced a price increase for its liquid and bulk industrial gas products. This price increase is expected to be effective on July 1 or as the contracts allow. This price increase is expected to impact its customers in North America. The price changes follow:
- Liquid and bulk helium are expected to increase up to 20.0%.
- Liquid argon and microbulk are expected to increase up to 15.0%.
- Liquid and bulk hydrogen are expected to increase up to 10.0%.
APD noted that this price increase was primarily due to increases in operational costs and delivery costs related to specific regional supply-and-demand imbalances. The impact of the price increase could be positive for APD assuming that its volumes don’t fall, which is expected to be more visible in APD’s fourth-quarter earnings. In the second quarter, its Industrial Gases – Americas segment reported sales of $913.0 million, a YoY (year-over-year) increase of 3.0%.
APD’s stock price update
Air Products and Chemicals (APD) stock fell 3.7% and closed at $158.08 for the week ended June 22. As a result of this decline, APD traded 3.5% below its 100-day moving average price of $163.74, indicating a trend reversal in the stock’s 100-day moving average price.
On a YTD (year-to-date) basis, APD has fallen ~3.7%. Its peers Praxair (PX) and Eastman Chemical (EMN) have gained 2.2% and 10.2%, respectively, while International Flavors and Fragrances (IFF) has declined ~18.4%.
Analysts are bullish on APD stock and have maintained a target price of $184.40. This forecast implies a return potential of 16.6% from its June 22 closing price. APD’s 14-day RSI (relative strength index) of 35 indicates that the stock is approaching a temporarily oversold position.
Investors can indirectly hold APD via the Materials Select Sector SPDR ETF (XLB), which invested 5.9% of its portfolio in Air Products and Chemicals on June 22. XLB declined ~2.0% for the week.