DuPont de Nemours (DD) - Get DuPont de Nemours, Inc. Report shares moved higher Thursday as analysts touted the industrial materials group's potential to boost earnings from its semiconductor division.
“The semis end-markets for DD present one of the clearest secular growth trends and support a multi-year earnings tailwind,” said BMO Capital Markets analyst John McNulty, who carries an 'outperform' with a $96 price target on the stock.
McNulty noted "continued growth in computing infrastructure from trends like work from home and an increasing count of electronics per consumer; ongoing proliferation of 5G smartphones; growth in data collection, processing and storage" as well as 'growing industrial and autos demand from trends like autonomous and electric vehicles” in his assessment.
Credit Suisse’s John Walsh, who carries a neutral rating with an $84 price target, said DuPont "successfully highlighted its $2 billion semiconductor technologies business unit (12% of total DD) as a secular winner vs. only a beneficiary of near/medium-term demand for chips."
“However, investor conversations continue to focus on the potential for a negative guidance revision in the quarter/year, driven by peer commentary … and negative revisions to light vehicle production and consumer electronic devices.”
Further, “Semi technologies sales are on path to grow 13% on a compound annualized growth basis from 2019-2021 compared to industry growth of 8%,” McNulty said.
“The company expects to consistently outperform the broader market by 200-300 basis points, driven by the depth of their products/solutions and increasing wafer content.”
DuPont shares were marked 1.3% higher in late-morning trading Thursday to change hands at $69.15 each, a move that would trim their year-to-date decline to around 2.8%.