Credit Suisse Initiates Corteva Coverage, Sees Sharp Upside

Credit Suisse analyst John Roberts initiated coverage of Corteva Inc CTVA with an Outperform rating and a price target of $68, implying an upside of 34%.
The analyst compares CTVA with its peers and says that CTVA is a leading seed producer. He adds that CTVA is also replacing in-licensing expenses with new in-house traits. Additionally, CTVA pension liabilities are declining as interest rates rise.
Roberts states that CTVA is one of only five major global pesticide producers. Pricing over time is driven primarily by a mix of improvements from new products, and CTVA spends ~8% of sales on R&D – among the highest in his coverage.
CTVA was created from a merger of Dow & DuPont's agriculture units. DuPont's legacy glyphosate trait in-licensing agreement will be rolling off, and Dow's new Enlist trait is ramping to replace the in-licensed Xtend trait, noted the analyst.
Roberts says that the key risks to the downside include new product failures/recall, a significant drop in farm profitability, or a major decline in interest rates.
Price Action: CTVA shares are trading lower by 2.64% at $50.60 on the last check Thursday.
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