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Canadian Deal for Praxair Surface

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Industrial gas producer and supplier, Praxair Inc’s subsidiary, Praxair Surface Technologies recently won a long-term contract from Canada based aerospace and industrial products manufacturer, Héroux-Devtek Inc. .

The coating specialist will be providing SermeTel® coating products to airframe components, including Messier-Bugatti-Dowty landing gear components and components for the Airbus A330 and A340 wide-body commercial jetliners. Financial terms of the contract were not disclosed.

The contract enhances Praxair Surface Technologies’ popularity as one of the leading surface coating providers for the aviation industry.

We foresee solid long-term growth prospects for Praxair as the company strives to achieve its long-term targets of annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18% by 2015.

Moreover, we appreciate the company’s earnest effort in returning values to shareholders through dividends and share buybacks which makes the stock all the more attractive.

The current Zacks Consensus Estimate for the second quarter of 2012 is $1.44, representing a year-over-year increase of 4.52%. Estimates for the fiscal years 2012 and 2013 are $5.84 and $6.65, reflecting annual growth of 7.63% and 13.73%, respectively.

We maintain a Neutral recommendation on Praxair. Currently, the stock carries a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.

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