Contaminant Litigation Risks May Affect DuPont Valuation, Analyst Downgrades Stock
Portfolio Pulse from Shivani Kumaresan
Bank of America Securities analyst Steve Byrne downgraded DuPont de Nemours Inc (NYSE:DD) from Buy to Underperform, while raising the price target from $78 to $80. The downgrade is attributed to relative valuation, modest earnings recovery in 2024, and under-appreciated PFAS liabilities. The analyst raised the 2024 EPS estimate from $3.76 to $3.85 due to expected improvements in U.S. housing starts and modest gains in Electronics & Industrial. However, concerns over PFAS litigation risks, particularly personal injury litigation, are seen as a potential threat to DD's stock value. DuPont's shares dropped 2.56% to $73.60 following the news.
January 16, 2024 | 8:46 pm
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DuPont downgraded by Bank of America Securities from Buy to Underperform with a price target increase from $78 to $80, due to PFAS litigation risks and modest earnings recovery expectations.
The downgrade by a major analyst due to PFAS litigation risks and modest earnings recovery is likely to negatively impact investor sentiment in the short term. The increase in price target may not offset the downgrade's impact, as evidenced by the immediate drop in share price. The litigation concerns, especially regarding personal injury claims, add uncertainty to the company's future financial obligations, which can deter investors.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 100