Citi: Linde beats third-quarter expectations on Americas volume and price growth, raises full-year guidance but signals a softer fourth quarter

Why did third-quarter results beat expectations?

Linde’s third-quarter adjusted earnings per share were $4.59, above Citi’s estimate of $4.53 and the market consensus of $4.52. The company’s sales volumes rose 2% year over year, with electronics, chemicals and energy end markets the main contributors.
Prices rose 3% year over year, accelerating by 1 percentage point from the previous quarter. Citi sees the Americas as the main source of the earnings beat: on the bank’s adjusted comparison basis, price and mix in the Americas grew 6% and volumes rose 3%, driving operating profit up 12% year over year.
The Lincare business has now moved to the “Other” segment, with $593 million and $575 million in revenue removed from the Americas segment for the third quarter of last year and the second quarter of this year, respectively. This reporting change needs to be considered when comparing Americas results.

Revenue in Europe, the Middle East and Africa rose 7% year over year to $2.327 billion. Underlying sales grew 3%, comprising volume growth of 1% and price increases of 2%; the underlying margin improved by 6 basis points year over year, slightly better than Citi expected.
Asia Pacific revenue rose 12% year over year to $1.95 billion, with underlying sales up 8%, including volume growth of 5%, mainly from project start-ups and equipment sales. However, equipment sales and costs associated with helium supply disruptions made the region’s performance slightly weaker than Citi expected.

The midpoint of the company’s full-year 2026 earnings-per-share guidance is $17.87, slightly above the market consensus of $17.85; however, the midpoint of its fourth-quarter guidance is $4.45, below the consensus of $4.53.
Citi considers the fourth-quarter guidance somewhat conservative and places greater weight on continued growth in the on-site gas supply project backlog and strong demand for customer project proposals. The bank is also watching margin pressure at Lincare and measures to ease costs, as well as the outlook for the helium business in 2027.

Citi rates Linde Buy with a $560 price target, valuing it at approximately 18.5 times its forecast enterprise value to EBITDA for 2027, above the company’s five-year average of approximately 17 times on a two-year-forward basis.
The bank believes that pricing and productivity improvements, clean energy projects and a better macroeconomic environment could drive operating margin expansion over the next several years. An economic slowdown would weigh on industrial gas volumes, but the project backlog and long-term contract structure could partly cushion the impact.