BMO Capital Markets analyst John P. McNulty downgraded DuPont de Nemours Inc DD to Market Perform (from Outperform) and at a lowered price target of $72 (from $80).
Yesterday, DuPont reported preliminary fourth-quarter net sales of ~$2.90 billion (vs. consensus of $3 billion) and adjusted EPS of $0.85 – $0.87 (vs. $0.85 estimate).
DuPont expects first-quarter net sales of around $2.8 billion (vs. $3.04 billion estimate) and adjusted EPS of about $0.63 – $0.65 ($0.88 estimate).
The analyst says the first quarter is likely the bottom for their earnings, with the implied guidance for the second quarter and the rest of the year well below his estimate.
While the analyst sees some growth in the second half of 2024, the growth level remains to be seen, with the new 2024 baseline appearing to be roughly at +$2.8 billion (vs. the Street view of $3.2 billion).
Consequently, McNulty is reducing the estimate for 2024 and 2025 EBITDA to $2.86 billion (from $3.19 billion) and $3.22 billion (from $3.47 billion), majorly due to the Industrial segments (Water and Safety) and gradual improvement in E&I segment.
Also, the analyst cuts EPS estimates to $3.33 (from $3.93) in 2024 and expects $4.10 in 2025.
Also, McNulty writes that although management stated the cost-cutting initiative to counter some end-market weakness and significant buyback support, it is not enough to offset the challenging market.
Apart from this, Wells Fargo also reduced the rating to Equal-Weight (from Overweight) with a price target cut ($69 from $85).
Price Action: DD shares are trading lower by 0.70% at $63.75 on the last check Thursday.
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