Zacks_Analysts' Blog : Praxair Acquires Weldco - Analyst Blog

Praxair Inc. (PX) recently announced the acquisition of the assets of Cincinnati, Ohio-based gas distributor, Weldco Inc. for an undisclosed amount. The transaction was carried out by Praxair’s subsidiary, Praxair Distribution Inc. 

With this acquisition, Praxair intends to extend its foothold in one of the top 20 wielding markets of the US. The target company specializes in the distribution of industrial and specialty gases; besides providing ancillary wielding equipment, supplies and services.  

We believe Praxair’s expansionary efforts will be well rewarded for the company in the years ahead and enable it to achieve its long-term goals. Annual organic sales growth target is set at 8%-12%, with emerging markets, including South America, Asia, and Mexico, accounting for an estimated target of 45% of total sales by 2015.

Globally, demand for industrial gases is on the rise with the growth in their application areas. Hydrogen for refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production are being increasingly used.

Praxair recently reported its financial results for the second quarter 2011 with adjusted earnings per share of $1.38 in the quarter, above the Zacks Consensus Estimate of $1.37 and up 16% year over year.

The current Zacks Consensus Estimate for the third quarter is $1.39, representing a year- over-year increase of 14.93%. Estimate for the fiscal year 2011 and 2012 is $5.47 and $6.27, respectively.

Praxair faces stiff competition from Air Products and Chemicals Inc.(APD) and Airgas Inc. (ARG). We currently maintain a Neutral recommendation on Praxair.