Citi Research released an investment report today highlighting upcoming potential catalysts in Air Products & Chemicals, Inc. (NYSE:APD). Analysts PJ Juvekar and John J. Hirt suggest that current consensus earnings estimates for APD are too low, and that a there are a number of catalysts that could lead to stock price appreciation over the next few quarters. It should be noted that Bill Ackman of Pershing Square Capital Management holds a significant position in APD.

Air Products & Chemicals’ new CEO could be catalyst

The first leg of Juvekar and Hirt’s bull thesis for Air Products & Chemicals, Inc. (NYSE:APD) is that the appointment of a new CEO to replace retiring CEO John McGlade is likely to provide a boost to the stock price. The decision regarding a new CEO is expected to be made in 1H 2014.

Air Products

Current estimates too low

The second leg of the Citi’s analysts positive analysis of Air Products & Chemicals, Inc. (NYSE:APD) is that current analyst estimates are simply too low. “We think that current street estimates reflect only the contribution from new projects that are slated to start up in the next few years and little from improvement in the base business or any upside created by the new CEO. APD is expecting 20-25c of EPS from new projects in 2014 and double that level, or 40c-50c, in 2015.”

Air Products EPS

Further portfolio streamlining

The report also highlights the possibility that Air Products & Chemicals, Inc. (NYSE:APD) could continue the process of streamlining and rationalizing their portfolio, and this could also lead to improvement in the PPS. They explain their thoughts below.

“The portfolio has become more streamlined in recent years with the divestiture of European homecare, exit of polyurethane intermediates and a restructuring of photovoltaics. We think a new CEO may look at Electronics & Perf Materials dispassionately. Performance Materials, now a true specialty after the PUI divestiture, has little synergies with industrial gases. Even in Electronics, while the tonnage and bulk electronics business seems core to us, the PMDS (Process Materials and Delivery Systems) and AMDS (Advanced Materials and Delivery Systems) businesses require different core competencies from gases.”

Rating raised to Buy

The report also officially announces that Citi is officially changing its rating on Air Products & Chemicals, Inc. (NYSE:APD) from Neutral to Buy, with a target price of $133. Air Products & Chemicals is trading up $1.71 today at $119.18, as of 11:40 AM ET today.