Praxair Signs ControLyo Contract – Analyst Blog

Praxair Inc. (PX) signed a contract with SP Scientific, according to which the latter will be utilizing Praxair’s ControLyo nucleation on-demand technology. The combination of Praxair’s ControLyo technology and SP Scientific’s leading line of laboratory lyophilizers will enable drug manufacturers to use various formulations during drug and process development.

The technology, mainly used by pharmaceutical and biotechnology companies, strictly controls the freeze-drying process for the development of drugs. Prior to the development of this technology, the freezing step of lyophilization could not be controlled due to the random nature of the nucleation or crystal-forming process.

SP Scientific is engaged in the production of laboratory-to-production scale freeze dryers/ lyophilizers, centrifugal evaporators and concentrators, thermal control system and glassware washers.

 Praxair is a premier industrial gas supplier in the Americas and internationally. The company’s intense focus on expanding its reach within its operating regions while adding new customers has accelerated its profit, which should continue in the future. Furthermore, Praxair currently stands well positioned to benefit from the favorable economic environment, given its broad end-market exposure to food and beverage, steel, glass and chemicals.

However, Praxair’s large international presence increases its risks relating to fluctuations in foreign currencies and geopolitical uncertainties. Besides, volatility in energy prices further enhances its risks of energy supply in adverse economic conditions.

The company expects diluted earnings per share to be in the range of $1.15 to $1.20 for the third quarter of 2010 and between $4.60 and $4.70 for full-year 2010. Total revenue for full-year 2010 is estimated to be approximately $10.0 billion.

Praxair faces stiff competition from Air Products and Chemicals Inc. (APD); Airgas Inc. (ARG); The Linde Group; Chromalloy Gas Turbine Corporation and Bodycote. We are currently maintaining a Neutral recommendation on Praxair.