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Praxair Secures a New Long-Term Contract

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Nov. 20 2020, Updated 2:29 p.m. ET

Praxair secures a new contract

In a press release on November 12, Praxair, which is now the wholly-owned subsidiary of Linde (LIN), announced that it has entered into a long-term agreement to supply oxygen to Fulcrum BioEnergy’s Sierra BioFuels Plant in Storey County, Nevada. However, Praxair didn’t disclose the financial aspects of the deal.

According to the press release, Praxair will construct two vacuum pressure swing adsorption plants at the facility. The facility is expected to start its operations by 2020. The plant will also use Praxair’s proprietary technology—Hot Oxygen Burner, which will help increase the syngas yield from the gasification process.

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Armando Botello, Praxair’s vice president of the west region for the US Industrial Gases business, said, “Praxair is proud to partner with Fulcrum at its Sierra waste to fuels plant in Nevada. This project will use our Hot Oxygen Burner (HOB) and VPSA technologies to deliver an innovative and reliable solution for our customer.”

Linde’s stock movement

Praxair stock, which now trades as Linde, started trading on October 30 and opened at $166.11. Since then, the stock has fallen 4.1%. The stock has fallen due to Praxair’s third-quarter earnings and the volatile stock market. Praxair reported revenues of $3.0 billion in the third quarter and an adjusted EPS of $1.69.

Analysts forecast Linde’s target price at ~$173, which implies a return potential of 8.6% over the closing price as of November 12. Investors could hold Linde indirectly by investing in the Materials Select Sector SPDR Fund (XLB). XLB has invested 14.9% of its holdings in Linde. The fund also provides exposure to DowDuPont (DWDP), Sherwin-Williams (SHW), and PPG Industries (PPG) with weights of 19.4%, 5.7%, and 4.3%, respectively.

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