NEW YORK (TheStreet) -- Airgas (ARG) stock was downgraded to "hold" from "buy" at Jefferies on Friday. The firm raised its price target on the stock to $143 from $113. Jefferies' price target on the stock is pegged to Air Liquide's offer to buy Airgas for $143 per share, or $13.4 billion.
The Radnor, PA-based supplier of packaged gases and related hardgoods was downgraded after Air Liquide, a French gas and services company, announced it was buying the company earlier this week, Jefferies said.
The deal is expected to close by the 2016 third quarter without any significant regulatory roadblocks, the firm added.
"Many of Airgas end markets remain challenged (manufacturing, energy, chemicals, metal fab) due to lower commodity prices and strength in the USD," Jefferies said. "We expect volumes will remain challenged through the deal close, and while Airgas indicates that the company intends to continue with its roll-up acquisition strategy, we expect purchases to taper off over the next few months."
Airgas stock closed at $138.75 on Thursday.
Separately, TheStreet Ratings team rates AIRGAS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate AIRGAS INC (ARG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, growth in earnings per share, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 19.3%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AIRGAS INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AIRGAS INC increased its bottom line by earning $4.86 versus $4.68 in the prior year. This year, the market expects an improvement in earnings ($4.93 versus $4.86).
- The gross profit margin for AIRGAS INC is rather high; currently it is at 56.24%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.13% trails the industry average.
- Net operating cash flow has slightly increased to $147.92 million or 2.05% when compared to the same quarter last year. Despite an increase in cash flow, AIRGAS INC's average is still marginally south of the industry average growth rate of 11.87%.
- You can view the full analysis from the report here: ARG
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.