DuPont stock drops by 2.9% in pre-market trading on Monday after Barclays downgraded the stock from “equal weight” to “underweight.”
DuPont Stock Drops
Barclays analysts expressed concerns over DuPont’s valuation, stating that it has likely reached its peak following recent market gains. The company’s stock has soared to multi-year highs, but analysts warned that the upcoming quarters could bring increased uncertainty. With limited stock buyback options and ongoing market volatility, DuPont may face potential underperformance.
Planned Breakup Raises Skepticism
A key factor behind the downgrade is DuPont’s planned breakup into three separate entities. While some investors are optimistic that the Water and Electronics divisions will fetch high valuations post-breakup, Barclays analysts remain skeptical about DuPont’s core business, known as RemainCo. RemainCo, which is tied to cyclical and industrial sectors, could face challenges, especially in an uncertain market.
Choppy Fundamentals and Industry Challenges
Barclays also highlighted DuPont’s “choppy” fundamentals, particularly in sectors like Electronics and broader industrials, which are experiencing slower growth. The analysts raised concerns about DuPont’s cash conversion rates, PFAS liabilities, and the potential for dis-synergies during the company’s restructuring.
Leadership Transition Adds Uncertainty
While the transition of DuPont’s longtime CEO to Executive Chairman has been generally well-received, questions remain about how the new leadership will steer the company through its complex breakup. This adds another layer of uncertainty for investors.
Price Target Reduced
Barclays lowered its price target for DuPont to $84, down from $88, reflecting about a 4% downside. Analysts remain cautious about the company’s ability to deliver substantial equity upside, particularly as investors await more information about the spinoff and leadership transitions in the coming months.