Barron’s Notes That Analysts Prefer Dow Over DowDuPont

Earlier this month DowDuPont (DWDP) began its ‘slim down’ phase with the spinoff of the new Dow Corporation (DOW). The new company received lots of love from the index community. It replaced DowDuPont in the Dow Jones Industrial Average and is also a member of the S&P 500 index. Now it is seemingly also the darling of the Wall Street analyst community as well. According to Barron’s:

About 75% of analysts launching coverage on the new Dow stock rate it a Buy, almost 20 percentage points better than the average buy rating-ratio for a stock in the Dow Jones Industrial Average. The remaining DowDuPont company (ticker: DWDP), comprised of the DuPont specialty chemical business and the Corteva agricultural business, is less beloved. Only 55% of analysts covering DowDuPont stock rate it a Buy.

Barron’s also recently provided an example of analyst love. RBC’s Arun Viswanathan made Dow stock a ‘Top Pick’ with a price target of $68. At the same time he downgraded DWDP stock. He is a big fan of the company’s yield and returning of capital to shareholders.

The analyst love has been coupled with a sharp rise in the standalone company’s stock price. DOW stock has jumped since when issued trading and is up ~20% in the ensuing weeks. Not a bad start, especially when compared to DowDupont, up just ~5% during the same period.

The slim down efforts will continue in a few months. DowDuPont is set to spin off Corteva Bioscience, its agriculutral business, in June. The new company will be the largest pure play ag seed company, but will it receive the same kind of love as its sibling?

Disclosure: Author holds no position in any stock mentioned.