DuPont Shares Drop After Barclays Downgrade

Shares of DuPont de Nemours (NYSE:DD) fell 2.9% in pre-market trading on Monday after Barclays downgraded the stock from “equal weight” to “underweight.”

Barclays analysts raised concerns over the company’s valuation, believing it has reached full value due to recent market optimism.

They highlighted that DuPont’s shares have reached multi-year highs but warned of increased uncertainty in the upcoming quarters. This scenario, coupled with limited stock buyback support and heightened market volatility, puts DuPont in a position for potential underperformance.

A key factor in the downgrade is DuPont’s planned separation into three distinct entities. While there are bullish expectations regarding high valuations for the Water and Electronics units post-breakup, there are doubts about whether the remaining core businesses (RemainCo) will achieve higher multiples.

RemainCo, focusing on cyclical and industrial sectors, may struggle amid overall market uncertainties.

Furthermore, Barclays pointed out that DuPont’s fundamentals appear “choppy,” particularly in the Electronics sector and broader industrials, which face slowing growth.

Concerns were also raised regarding DuPont’s cash conversion rates, PFAS liabilities, and the potential for dis-synergies as the company proceeds with its split.

Although the leadership transition—moving from a longtime CEO to Executive Chairman—has been positively received by investors, it raises questions about the new management’s performance as the company navigates its complex separation.

Barclays has reduced its price target for DuPont to $84 from $88, indicating a potential downside of around 4% from the previous price. The analysts remain cautious regarding the company’s capacity to generate significant equity upside as investors await further details about the spin-off and leadership changes in the upcoming months.