Air Products (APD) is expected to report Q3 earnings before market open Wednesday, July 23, with a conference call scheduled for 10:00 a.m. ET.
The consensus estimate is $1.31 for EPS and $2.71B for revenue, according to First Call. On the company's last earnings call management provided Q3 EPS guidance of $1.25 to $1.30, and FY08 guidance of $4.95 to $5.05.
Keybanc has a positive bias toward the quarter and its EPS estimate stands at $1.32. The firm suspects that good momentum in Merchant and Tonnage businesses will drive strong YoY growth. Keybanc's FY08 EPS estimate remains at $5.10, above management's guidance range of $4.95 to $5.05. The firm suspects that higher energy costs bode well for bidding activity in 2H08.
Keybanc remains comfortable with its outlook due to solid project backlog, good bidding activity and positive pricing trends. Air Products is one of Keybanc's best ideas in the space, with its attractive growth potential due to several levers for margin expansion, improving returns on capital and general immunity from the volatility in the petrochemical markets. Keybanc has a Buy rating on Air Products and sees very attractive upside to its target of $128.