BB&T Capital Cuts Airgas to Hold

Analyst Holden Lewis feels the stock is "priced for perfection", which is harder to justify given some of its sales and margins trends

BB&T Capital downgraded Airgas (ARG) to hold from buy, after the company on Monday posted quarterly results.

Analyst Holden Lewis says the company's 45 cents fourth quarter earnings per share (EPS) from continuing operations topped his 44 cents estimate, and the company's 41 cents to 43 cents EPS guidance. He says this is not shocking given the industrial welding market. Meanwhile he notes there was less outperformance out of the company's sales/gross margin, so he views its fourth quarter as mildly disappointing. He trims his $1.90 fiscal year 2007 (ending March) EPS estimate to $1.85 due to a higher tax rate and lower gross margin forecast. He also maintains his $2.25 fiscal year 2008 forecast. He feels the stock is priced for perfection, which is harder to justify given some of its sales/margins trends did not materialize. He says the stock is likely to churn in the near term.

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