On Tuesday, BofA Securities shifted their stance on DuPont (NYSE:DD), elevating the chemical giant’s stock rating from Underperform to Neutral. The firm also adjusted DuPont’s price target to $75.00, down from the previous $88.00. The revision comes after DuPont shares experienced a significant decline over the past two months, with InvestingPro data showing a 27.3% drop over the past six months. Despite recent challenges, DuPont, with its $25.5 billion market cap, appears undervalued according to InvestingPro’s Fair Value model. For deeper insights into DuPont’s valuation and 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
Steve Byrne, an analyst at BofA Securities, acknowledged the potential earnings risks for DuPont due to trade disruptions. The tariffs could affect DuPont’s ElectronicsCo and IndustrialCo divisions, with concerns over reciprocal tariffs potentially impacting consumer electronics demand. However, Byrne noted that temporary exemptions for certain products like smartphones and computers should mitigate some of the negative effects. These products currently face a 20% fentanyl tariff on Chinese imports, which is expected to be passed on to consumers, and are subject to minimal tariffs in other regions. Despite these challenges, DuPont maintains strong fundamentals with $12.4 billion in revenue and a healthy 36.6% gross profit margin.
Despite the trade concerns, Byrne considers the earnings outlook for ElectronicsCo to be relatively stable. Nonetheless, there is a concern that the broader market’s multiple compression could affect ElectronicsCo’s valuation, especially as DuPont plans for a spin-off of this division. InvestingPro analysis shows DuPont trading at an attractive PEG ratio of 0.42, suggesting potential undervaluation relative to its growth prospects. The company also offers a steady 2.69% dividend yield, having maintained dividend payments for 55 consecutive years.
The analyst also mentioned the investigation into DuPont’s Tyvek business by Chinese authorities, which is perceived as a retaliatory move. However, Byrne believes that the financial risks from this investigation are limited, as the Tyvek business represents less than 1% of DuPont’s consolidated sales. The adjustment in DuPont’s stock rating and price target reflects a reassessment of the company’s position amid these trade and market challenges. According to InvestingPro’s comprehensive analysis, DuPont maintains a "GOOD" overall financial health score, supported by strong cash flow and profitability metrics.
In other recent news, DuPont de Nemours, Inc. has been the focus of several significant developments. The company is under investigation by China’s State Administration for Market Regulation for suspected monopolistic practices. DuPont confirmed its cooperation with the investigation, which relates to its Tyvek® brand sales in China, amounting to less than 1% of its total net sales in 2024. Concurrently, the company is facing challenges due to a new 34% tariff imposed by China on U.S. imports, which could impact its operations amid existing trade tensions.
Additionally, DuPont is reportedly considering selling its Nomex and Kevlar brands as part of a restructuring strategy, potentially raising around $2 billion. In another strategic move, DuPont announced the board members for its upcoming Electronics spin-off, slated to become an independent entity by November 2025. This new board will guide the spin-off’s strategic direction and growth in the electronics sector.
Meanwhile, KeyBanc Capital Markets has upgraded DuPont’s stock rating from Sector Weight to Overweight, setting a price target of $81.00. The analysts cited DuPont’s strong balance sheet and the potential for growth in its electronics and water businesses as key factors in the upgrade. Despite the challenges in China, KeyBanc views DuPont’s current stock valuation as a bargain, reflecting confidence in the company’s market position and financial health.
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