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On Monday, KeyBanc Capital Markets shifted its stance on DuPont de Nemours, Inc. (NYSE:DD), elevating the stock’s rating from Sector Weight to Overweight. The firm’s analysts set a new price target of $81.00 for the chemical giant’s shares. This upgrade comes after observing a significant decline in DuPont’s stock value, which dropped by 21% since March 31, contrasting with the S&P 500’s 4% fall in the same period.
KeyBanc’s analysts believe that DuPont is a high-quality company with the potential to grow its EBITDA at a mid-single to high-single digit rate throughout economic cycles. They highlighted the company’s robust balance sheet as a key factor that could provide resilience in the face of a potential economic downturn. This assessment aligns with InvestingPro’s Financial Health Score of "GOOD" and the company’s strong dividend history, having maintained payments for 55 consecutive years with a current yield of 2.78%. The analysts also emphasized the strength of DuPont’s electronics and water businesses, describing them as world-class secular growth franchises.
The valuation of DuPont’s shares was another point of interest for KeyBanc, with analysts noting that the stock is trading at a rare discount. They pointed out that even after reducing their earnings estimate by 5%, DuPont’s shares are trading at 9.7 times the projected 2025 enterprise value to EBITDA (EV/EBITDA), which matches the current EV/EBITDA ratio. With a price-to-book ratio of 1.06 and expected net income growth this year, the analysts consider this a bargain for such quality assets. Discover more detailed valuation metrics and 10 additional exclusive insights with InvestingPro’s comprehensive research report.
Despite DuPont’s approximate 20% sales exposure to China, which poses a risk given the geopolitical climate, KeyBanc analysts argue that the current stock valuation sufficiently accounts for this concern. They also mentioned the tariff exemption recently granted to Apple (NASDAQ:AAPL) as a positive development, reducing the downside risk for DuPont and its peers in the sector.
KeyBanc’s new sum-of-the-parts (SOTP) based price target of $81.00 implies a 12.8 times multiple on the projected 2025 EV/EBITDA, according to the analysts. This target reflects their confidence in DuPont’s ability to capitalize on its strong market position and financial health in the coming years.
In other recent news, DuPont de Nemours, Inc. disclosed that the State Administration for Market Regulation of China has initiated an investigation into the company’s business practices, focusing on suspected monopolistic behaviors. This investigation coincides with China’s imposition of a new 34% tariff on U.S. imports, which could affect DuPont’s operations significantly. Additionally, DuPont is reportedly considering selling its Nomex and Kevlar brands, potentially generating around $2 billion as part of a broader restructuring strategy. In a move to enhance its focus on high-growth markets, DuPont announced the selection of board members for its planned Electronics spin-off, expected to become an independent entity by November 2025. The board will include industry leaders such as Michael Stubblefield and Jon Kemp, who will serve as Chairman and CEO, respectively. Meanwhile, Citi has maintained its Buy rating on DuPont, reiterating a $95 price target, expressing confidence in the company’s strategic direction and leadership. Investors are keeping a close watch on these developments, considering their potential impact on DuPont’s financial performance and market position.
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