JPMorgan Upgrades DuPont De Nemours On Valuation

DuPont de Nemours Inc.’s DD stock has lost 3% since its December peak versus 17% gains in the sector during the same period and appears to have been “over-driven to the downside,” according to JPMorgan.

The DuPont De Nemours Analyst: Stephen Tusa upgraded the rating for DuPont De Nemours from Neutral to Overweight, while raising the price target from $84 to $85.

The DuPont De Nemours Thesis: The stock has underperformed its closest peer 3M Co MMM by 6% since end-January, although the latter has “more structural business quality issues and liability overhangs,” Tusa said in the upgrade note.

The current share price now reflects “myriad risks including raw materials, and the deferred cycle in auto/electronics, the opposite of what happened in December when the stock peaked,” he added.

For both these markets, DuPont De Nemours has “amongst the most attractive positioning with outgrowth potential and high margins,” the analyst noted.

“China is a risk but the pure property exposure here is low, and with the vast majority of the electronics exposure (~40% of the China total) for export, we think this is less about in country growth and more a reflection of the footprint of the industries they sell into and will not likely lag when they resume growth,” Tusa wrote.

“On the bottom line, there will be increased raw material costs, but pricing is already accelerating, though also with a lag, and the spread here should be accretive in ’22, at the same time volumes are rebounding, an accentuated push forward in earnings from ’21 to ’22 unusual for this point in the cycle,” he further said.

DD Price Action: Shares of DuPont De Nemours had risen by 1.78% to $70.36 at the time of publication Monday.

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