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DuPont (NYSE:DD) +2.5% in Friday’s trading to its highest in more than two years after Jefferies upgrades shares to Buy from Hold with a $101 price target, raised from $78, anticipating a recovery in the company’s end markets that suggests room for more multiple expansion.
Jefferies analyst Laurence Alexander says his bullish call focuses on “a new operating culture driving a structural improvement in margins and free cash flow generation; automotive end markets improving; industrial and electronic markets reverting to trend growth; and cyclical recovery for construction markets.”
Alexander expects DuPont’s (DD) end markets “to start to exit trough conditions in H2 2024, led by electronics, albeit with global GDP most likely remaining choppy for the next several quarters and the U.S. a relative bright spot,” and by 2025 he sees greater volume in residential construction, industrial and electronics markets, while non-residential construction stabilizes.
DuPont (DD) “provides both operating leverage to the next cycle in electronics, construction and manufacturing, as well as support for multiple expansion based on portfolio evolution through cultural change and asset selection,” Alexander writes, adding that discipline around free cash flow deployment should lead to a constructive narrative over the next 2-3 years.
