Ahead of the Bell: Analyst backs 'Buy' on Praxair

Jefferies & Co. reiterated a "Buy" rating for industrial gas supplier Praxair Inc. Tuesday, citing a strong project backlog.

Praxair this week said it would build two hydrogen plants with a total capacity of 200 million cubic feet per day and supply BP PLC with hydrogen and steam at its refinery in Whiting, Ind. The plants are scheduled to open in the second half of 2010.

A Praxair subsidiary in China landed a long-term supply contract with Anhui HuaYi Chemical Co. for specialty chemicals.

Anhui is a subsidiary of one of China's largest chemical groups.

Jefferies noted two new facilities in China and another two in Indiana scheduled to begin operations within the next three years.

"These announcements underscored Praxair's strong backlog," Jefferies wrote.

Praxair is already building a similar Chinese plant that will supply the chemical industry.

"Praxair's leverage to pricing cycles in the U.S., Europe, and Brazil, coupled with ongoing productivity initiatives and favorable end market trends, support further improvement in returns through 2010," Jefferies noted. "We reiterate our 'Buy' rating and $115 price target."

Shares of Praxair closed at $84.40 on Monday.