Airgas downgraded to ‘Hold’ on pricey stock value, risk profile after Air Products bid

Ahead of the Bell: Airgas downgraded to ‘Hold’

NEW YORK — An analyst downgraded industrial gas supplier Airgas Inc. on Thursday, saying investors in chemical stocks would be better off buying shares of Air Products & Chemicals Inc.

Jefferies & Co. analyst Laurence Alexander said that the risk and reward profile of Airgas looks less attractive at its current stock value. Airgas shares spiked 40 percent on Feb 5 after Air Products launched an unsolicited offer to buy Airgas for $5.1 billion in cash and the assumption of $1.9 billion in debt. Airgas stock has risen more than 50 percent since the start of February.

Alexander downgraded Airgas to “Hold” from “Buy,” with a price target of $60.

A combination of Airgas and Air Products would create one of the biggest industrial gas companies in the world.

Based on an analysis of possible outcomes of the hostile bid, Alexander concluded that Airgas’ stock value is at risk and long-term investors would be better off funneling their money to Praxair or Air Products.

Airgas shares finished Wednesday’s trading at $64.55.