Spinoff Odds & Ends: DuPont and Corteva Diverge

Perhaps readers thought that the DowDupont spinoff was beaten to death and were glad to see the final spinoff date pass. Sorry to disappoint, but there’s still more to say on the subject (and likely will be for some time!). In this week’s Odds and Ends we catch up on some of the recent action:

1. DuPont Gets Some Love From Wall Street…

DowDupont changed its name back to DuPont (DD) immediately after the Corteva (CTVA) spinoff. The company also executed a 1 for 3 reverse stock split. The dramatic change in the company’s share count and operating profile led to some confusion around its price targets and Wall Street is starting to catch up. The results are coming in and Barron’s notes that analysts think the new DuPont is a hit:

Seven chemicals analysts from large Wall Street brokerages have relaunched coverage of DuPont in the past few days with most bullish on the stock. Six of the seven recommend buying DuPont shares, with an average price target of $85, about 15% higher than recent levels.

Many analysts touted the company’s diverse profile, but amazingly Citi’s P.J. Juvekar is excited about the possibility of even further spinoffs and divestitures!

The new DuPont is a conglomerate of four different businesses: Electronics and Imaging, Nutrition and Health, Transportation and Advanced Polymers [and] Safety and Construction…Given the sparse amount of manufacturing and R&D synergies between the divisions, we believe each one could create more value as stand alone, more focused entity (sic), or as part of a strategic acquisition.

One would think the company might want to get on with actually growing, but with Ed Breen in charge, you never know.

2. While Corteva Agrisciences Seemingly Gets None

While things are looking good at DuPont, Corteva has slumped out of the gate.  As a result of the recent 20+% plunge, Barron’s is seemingly changing its mind just a few days after publishing a piece recommending FMC (FMC) as a safer play.

What caused the sudden drop though? Barron’s posits a few theories. First, the magazine blames ‘The Street’. Numerous Wall Street analysts slapped the name with a ‘Hold’ rating raising concerns about an underwhelming planting season. Heavy rains and flooding in the Midwest are forcing some farmers to abandon corn, whose seeds remain one of Corteva’s biggest products.

Another theory floated by the magazine is that Corteva could be suffering from the famous post-spin selloff. Although possible, Corteva is actually in the same specialty chemicals sector as its parent and is no slouch at a ~$20b market cap.

Although the name has since recovered a bit, there is no denying the slump. It might be worth checking out.

Disclosure: Author holds no position in any stock mentioned.