Praxair Teams Up With Vapotherm

Leading industrial gas supplier Praxair Inc. (PX - Analyst Report) recently penned a long-term respiratory gas supply contract with Vapotherm, Inc, a primary respiratory care device producer for domestics and hospitals in Stevensville, Maryland.

Under the pact, Praxair and Vapotherm will be jointly engaged in the promotion and supply of the recently introduced heliox system, approved by the U.S. Food and Drug Administration, to the hospitals of North America, Latin America, Spain and Portugal. The heliox system is a high-flow therapy tool which was launched by Vapotherm for uninterrupted supply of helium and oxygen gases through nasal tube.

The Heliox device system will be delivered to the hospitals along with Praxair’s heliox gas and a new proprietary gas cart arrangement to ensure security and flexibility of product supply. Additionally, the new system will help the patients take on new non-invasive respiratory option for better recovery.

Furthermore, through the joint venture Praxair is likely to strengthen its client base in the healthcare industry. There is a huge opportunity for the company to grow in future due to the increased demand for the industrial gases in several sectors. Praxair is estimating that the annual organic sales growth will be 8%-12% by 2015.

Even though, Praxair globally established itself in the diverse markets, it should be aware of the tough competition from its rivals including Kronos Worldwide Inc. (KRO - Snapshot Report) and Cabot Corp. (CBT - Snapshot Report), who are exhibiting striking results.

The current Zacks Consensus Estimates for Praxair is$1.45 and $5.85 for the second quarter of 2012 and for fiscal 2012, respectively. The company currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We maintain a Neutral recommendation on the stock.