Air Products shares slip on downgrade at Bank of America – They warned that the company faces growing headwinds across its clean hydrogen portfolio and key industrial markets – Hydrogen Central

Air Products shares slip on downgrade at Bank of America – They warned that the company faces growing headwinds across its clean hydrogen portfolio and key industrial markets

Air Products and Chemicals’ (NYSE:APD) shares fell about 2% in premarket trading Tuesday after being downgraded by analysts at Bank of America to Underperform from a previous investment rating of Neutral. They warned that the company faces growing headwinds across its clean hydrogen portfolio and key industrial markets.

The downgrade reflects heightened uncertainty around the financial viability and timing of three major clean hydrogen projects in Saudi Arabia (Neom), Louisiana and Alberta. Analysts flagged a deteriorating outlook driven by global trade tensions under the Trump administration, weakening policy support for climate initiatives, and growing reluctance among potential customers to commit to long-term contracts at viable price points.

While new leadership at Air Products has cut underperforming initiatives, the remaining marquee projects now carry elevated risk, Bank of America wrote. Tariffs and weakened climate policy could inflate capital costs and delay timelines, particularly for Neom and Louisiana, the bank said.

The Neom project, once considered a cornerstone of Air Products’ (NYSE:APD) clean hydrogen ambitions, is particularly vulnerable. Its primary market, Europe, is showing signs of backing away from green hydrogen targets in favor of blue hydrogen — a development that could weaken demand. Meanwhile, the Louisiana facility may struggle with diminished domestic interest amid a shifting U.S. regulatory landscape, including challenges to the EPA’s Endangerment Finding.

In contrast, the Alberta project was seen as a relative bright spot. Despite a likely delay beyond its planned late-2025 startup, it benefits from existing pipeline infrastructure and ongoing carbon capture incentives from the Canadian government. If executed effectively, it could offer a path to recovery for Air Products (APD), the analysts said.

Bank of America also cited broader macroeconomic pressures affecting the company’s traditional markets — energy, chemicals, metals and manufacturing — which together account for over two-thirds of its business. As a result, the firm trimmed its fiscal 2025 earnings estimate to $12.65 a share, slightly less than Air Products’ (APD) guidance range of $12.70 to $13 a share.

Looking ahead, fiscal 2026 earnings are forecast at $13.82 a share, assuming trade negotiations stabilize. Still, the bank lowered its valuation multiple and long-term growth assumptions, cutting its price target to $282 from $330 a share.

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Air Products shares slip on downgrade at Bank of America – They warned that the company faces growing headwinds across its clean hydrogen portfolio and key industrial markets, source

Source: hydrogen-central.com