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Non-Tech : Alternative energy

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To: Keith Feral who wrote (4098)	4/24/2008 4:55:37 PM
From: Lynn	Read Replies (1) of 16955

Do you still hold shares of APD, Keith? If so, this is another one we both hold. Yesterday they released earnings (headline only): 04/23/08 Air Products Reports Fiscal Q2 EPS Up 40%; Raises 2008 Full Year EPS Guidance (PR) Here's C's take on them in their, "North America Investment Daily:" 24 April 2008 ? 44 pages Page 37: Air Products and Chemicals Inc (APD) Gases & Electronics Carry Quarter; Future of Healthcare in Doubt ? Core Businesses Lead — APD delivered a reasonably strong qtr led by its core gases and Electronics & Performance Materials businesses. Strong Tonnage volumes and currency (+7¢) provided the tailwinds, with a nice push from equity affiliates income (+5¢) and the BOC acquisition in Poland (+2¢). These factors more than offset pockets of weakness in the US and Western Europe. ? Margin Goals in Sight — 1) Merchant op. margins improved 50bps Y/Y to 18.5%. Our '08 goal is roughly in-line with APD's at 19%. 2) Electronics margins improved 130bps to 12% in 2Q vs. APD's '08 goal of 13%, based on restructuring of the business. Our '08 goal is 12.7%. 3) Healthcare disappointed at 5.5% vs APD's goal of 10% & our new 6.1% goal ? Change of Heart on Healthcare — Management appears to be backtracking on its expansion strategy in US homecare (3% of total sales). It has struggled due to unfavorable reimbursement plans & poor integration of acquired businesses. We think investors have been frustrated with APD's lack of a consistent strategy regarding the "change of heart" on chemicals and healthcare. ? Raising Estimates & Target Price — APD raised its FY08 guidance to $4.95-$5.05 from $4.85-$5.00, and our new FY08 and FY09 EPS estimates are $5.00 and $5.75, respectively. We also raised our multiples as industry consolidation has led to only 4 major global players in an industry where growth has accelerated. Furthermore, industrial gas players have some of the highest returns in our space. As a result, our target price has increased to $115 from $102. [end] Page 11 is C's take on FCX's earnings. I'll post that on the FCX thread. Regards, Lynn

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