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Praxair Wins Decade-Long Contract

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Industrial gas producer and supplier, Praxair Inc’s (PX - Free Report) subsidiary, Praxair Surface Technologies won a 10-year contract from Messier-Bugatti-Dowty (MBD). Financial terms of the agreement between the parties have not been disclosed.
The decade-long contract requires Praxair Surface Technologies to provide thermal spray coating services on MBD’s airframe component programs. Praxair will operate through an airframe production line in Changzhou, its China facility, where production is expected to begin in 2013. Praxair’s services will replace chrome painting and enable MBD to make more environment friendly airframe components.

Praxair Surface Technologies supplies high-performance coatings that protect metal parts from wear, corrosion and high heat. The segment accounts for roughly 6% of the company’s total revenue. Such important contracts/agreements strengthen the company’s position in this line of business and also enhance the level of its performance in the quarters ahead.

Long-term growth prospects are bright for Praxair, with its strategic acquisitions, dividends and share buyback policy, and contract wins/joint ventures all representing a boon. These will help the company in achieving its long-term target of annual organic sales growth of 8%-12% by 2015.

The current Zacks Consensus Estimate for the fourth quarter 2012 is $1.38, representing a year-over-year increase of 1.8%. Estimates for 2012 and 2013 are $5.57 and $6.18, reflecting annual increase of 2.5% and 11.1%, respectively.

The stock also carries a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating. Its prime competitor Air Products & Chemicals Inc. (APD - Free Report) has a Zacks #4 (Sell) rating. Estimate for the December ending quarter currently stands at $1.29 per share.

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