A Look Ahead At DowDuPont's Catalysts Over The Next Year; Analyst Initiates At Buy

Bank of America's Steve Byrne initiates coverage of DowDuPont Inc DWDP with a Buy rating and $78 price target amid multiple catalysts for the next 12 to 18 months.

DowDuPont will be releasing its pro forma financials by Nov. 15 and this will help investors in better understanding the company's recurring earnings power, Byrne commented in his initiation note. On top of that the output from the board review of the "spincos" will likely be nearly completed and a final decision is expected within the next three months. Also, the board is likely to finalize the company's dividend policy and it is reasonable to assume a dividend rate of 38 cents per share per quarter will be announced.

Meanwhile, the freshly merged entity's petchem capacity will likely begin within the next six months and this alone could add $1 billion to EBITDA, the analyst continued. The company itself expects to capture 70 percent of run-rate synergies within year one and the full run-rate in two years.

In terms of financials, DowDuPont's expectations to achieve $20 billion in EBITDA in 2019 could actually be a conservative figure as it doesn't assume the $1 billion in targeted revenue synergies, the analyst also noted. As such, there exists a path for the stock to move as high as $100 per share over time.

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