DuPont Has Favorable Fundamentals and Manageable Risks

By Sam Boughedda

In a note to investors on Friday, BofA analyst Steve Byrne reiterated a Buy rating and $77 price target on DuPont de Nemours (NYSE:), the chemicals company.

BofA hosted a group meeting with DuPont leadership, where it said the company expressed no expectation of a second-half slowdown, citing the defensive nature of their product platform, lofty backlogs in electronics reflective of lean customer inventories and diverse demand outlets, and the high number of sold-out assets.

Byrne said the “slowdown thus far has been primarily tied to China, particularly in auto and electronics, but is being offset by growth in other markets.”

“CEO Ed Breen sees DD’s strong cash position and defensive platform as an opportunity to capture more market share both organically and inorganically (through bolt-ons). Management will have a pro forma cash balance of $7-8bn, some of which will be used for buybacks given current valuations. Company execution could drive multiple rerating, and we have conviction in the business model,” concluded the analyst.

DuPont stock is up more than 5% Friday in the last hour of trading.