DuPont shares rose 12%. So, where is the next target?
DuPont (DD) shares rose by 12% in the first half of this week on the back of the announcement of the purchase of Rogers and published reports. DD’s papers have stood out in the list of interesting stories in recent weeks. The quotes quickly rose to the expected short-term target of $76 and have already reached $78.6.
We are figuring out where the next target is. DuPont, formed in 2019 in the process of separating three public companies from the combined chemical giant DowDuPont, has a two-century history in its roots and began with the production of gunpowder.
Now DuPont produces special chemicals: plastics, adhesives, high-tech resins, adhesives, and lubricants for system solutions in the aerospace, automotive, and other resource-intensive manufacturing industries. DuPont’s Rogers acquisition on Tuesday said it had entered into a definitive agreement to acquire Rogers for $5.2 billion. Rogers manufactures materials for consumption in the fast-growing electric vehicle, 5G, and clean energy markets.
The transaction is to close in the second quarter of 2022. DuPont expects this to contribute to revenue growth, EBITDA, free cash flow, and adjusted earnings per share after the close. As part of the ongoing transformation, DuPont also announced its intention to sell a significant portion of its “Mobility & Materials” segment to finance the purchase of Rogers substantially.
Quarterly results DuPont’s profit and revenue exceeded forecasts due to strong demand and rising prices, offsetting rising costs. Revenue grew in the most significant segments relative to the same quarter last year and all markets: the United States, Europe, Latin America, and Asia. It reached $4.27 billion, which is higher than the expected $4.1 billion.
Net income per share was $0.8, and adjusted earnings per share increased by 89%, amounting to $1.15 and exceeding the forecast $1.12. At the same time, DuPont lowered its annual sales and profit forecast due to the global shortage of chips. “As the results of the third quarter show, demand in our end markets is high, and we are successfully operating against the background of commodity inflation and global supply chain problems.
We have moto raise prices in response to rising commodity prices strategic prices and will continue these actions in the fourth quarter to ensure a neutral price/cost ratio position this year,” said Lori Koch, DuPont CFO. Technical analysis of the current year, the company’s share price in a broad sideways direction. It is now actively recovering from the lower border with the prospect of moving to the upper one.
The current consensus forecast for the paper is slightly higher. The price has consolidated above the 200-day moving average, which is positive. The RSI has not yet entered the overbought zone on the daily chart.
Industry analysts expect Dupont earnings per share to grow over a three-year horizon. The consensus forecast, according to Refinitiv, suggests a growth potential of 19% from current levels. As a result, 15 out of 21 industry analysts recommend buying the company’s shares; the rest recommend holding.
After the announcement of the purchase of Rogers and the quarterly report, several analysts increased their targets. In particular, Credit Suisse raised its estimate to $95. Considering the technical picture, we can expect a recovery to the levels of $86-87 in the medium term.
