Before Tuesday, DuPont stock was flat year to date.
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DuPont
‘s third-quarter earnings were fine, but they weren’t what lifted the stock by almost 9% om Tuesday. Instead, investors and Wall Street analysts seem to expect that strategic moves the 120-plus-year-old company is making will bring faster growth.
Tuesday morning, along with its results, DuPont de Nemours (ticker: DD) announced the $5.2 billion purchase of the automotive materials supplier Rogers Corp., whose electronic and elastomeric materials end up in fast-growing end markets such as electric and autonomous vehicles as well as mobile devices. DuPont also is selling some of its slower-growth auto-related businesses, partly to fund the purchase.
Credit Suisse analyst John Walsh upgraded DuPont stock to Buy from Hold on Wednesday. His target for the price went to $95 from $76 a share, compared with the stock’s premarket level on Wednesday of $78.60.
Walsh called the third-quarter results solid, pointing out that any weakness was really due to the shortage of semiconductors, which is constraining car production everywhere. But DuPont’s plans are why he likes the stock.
“The catalyst for our upgrade is the announced portfolio management,” wrote Walsh. “We view the announcement as a bold transformative move.”
Rogers has faster-growing businesses and Walsh’s new target is based on 20 times his estimated 2022 earnings, up from his old target multiple of 16 times.
Vertical Research Partners analyst Jeffrey Sprague and Fermium Research analyst Frank Mitsch also upgraded DuPont stock. Both of their calls went to Buy from Hold.
Sprague’s price target went to $95 from $86 a share. Like Walsh, he believes the portfolio transformation is positive. Mitsch raised his price target to $87 from $84 a share.
With the three new Buy ratings, 76% of analysts covering the company rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. Before the latest news, about 65% rated shares at Buy.
Before earnings, the average analyst price target was about $92 a share. That is up to about $95 a share.
DuPont stock was up about 1.6% in premarket trading, to $78.60, after rising 8.8% Tuesday. Futures on the S&P 500 and Dow Jones Industrial Average were both down about 0.1%.
Before Tuesday, DuPont stock was languishing, flat year to date. M&A and the business portfolio transformation looks to be the shot in the arm the stock needed. Counting the premarket moves, the shares are up about 11% in 2021.
Write to Al Root at [email protected]
