Investing.com -- Air Products (NYSE:APD)&Chemicals shares surged more than 7% Monday following reports that activist investor Mantle Ridge has built a more than $1 billion stake in the company, with plans to push for strategic changes.

According to The Wall Street Journal, Mantle Ridge, led by Paul Hilal, intends to focus on succession planning for long-time CEO Seifi Ghasemi and improvements to capital allocation and company strategy.

Mantle Ridge reportedly believes Air Products is trading at a discount to its peers, despite its strong position in the industrial gas and clean hydrogen sectors.

Wall Street analysts have responded positively to the news. Evercore ISI upgraded the stock to Outperform, raising the price target from $305 to $365.

"The FY25 bridge looks more secure than expected. Activist a nice to have and what we were waiting for," the firm said, highlighting that Mantle Ridge's involvement could push for better capital allocation and risk management.

Citi also weighed in, emphasizing that the activist push could unlock shareholder value, particularly as Air Products' underperformance relative to peers Linde (NYSE:LIN) and Air Liquide (OTC:AIQUY) is not fully explained by market conditions.

Citi raised its price target for APD to $345 and placed a 90-day positive catalyst watch on the stock, suggesting that further clarity on CEO succession and project pipeline disclosures could boost investor sentiment.

Jefferies echoed this optimism, upgrading Air Products to Buy from Hold and raising its price target to $364. The firm believes the company could pivot back to its core industrial gas business, moving away from more speculative energy transition projects.

"An activist stake, in our view, would give Air Products an opportunity to both reset its narrative to "quality growth" and, at least for a while, tie shareholder returns to company initiatives rather than policy shifts and prospects for fly-ups in commodity spreads," wrote Jefferies.

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