Its stock price rose 8.1% to $58.31 at 11:30 a.m. New York time after the chemicals giant reported net income of $497 million, or 21 cents a share. Adjusted earnings of 74 cents a share topped analysts' expectations of 71 cents a share.
"The beat was driven by volumes, price, lower pension/[other post-employment benefits] costs, and synergies, offsetting raw inflation / [foreign exchange]," said Credit Suisse analyst Christopher Parkinson.
However, revenue of $20.12 billion fell short of the FactSet consensus of $20.23 billion.
DowDuPont announced a new share repurchase program of $3 billion, which it expects to complete by the first intended spin-off. The company announced in February that it will split into three independent companies: The Agriculture division will become Corteva Agriscience; the Materials Science unit will be called Dow; and, the Specialty Products business will be the new DuPont. The new Dow is expected to be the first unit to spin off by April 1, 2019. The Agriculture and Specialty Products divisions are on track to separate by June 1, 2019.
The company also said it is increasing its cost synergy commitment to $3.6 billion from $3.3 billion, and raised the expected 2018 year over year savings to $1.5 billion, from $1.4 billion. Credit Suisse's Parkinson said the revised synergy target was "a pleasant, unexpected surprise."
Jefferies analyst Laurence Alexander and his team echoed that sentiment, saying the "$300 million bump in cost synergies and a new $3 billion buyback ahead of the spins were more aggressive than we expected."
Further, the company doesn't see "any material impact from the tariffs on our businesses in the fourth quarter," Chief Financial Officer Howard Ungerleider told Reuters in an interview.
"DWDP's solid 3Q numbers vs. the consensus, maintained guidance and raised synergy and buyback targets should help to drive the stock," said BMO Capital Markets analysts John McNulty and Joel Jackson.
"This is the type of result we have expected from [CEO] Ed Breen and his quality management team and the stock reaction today reflects this," said TheStreet's Jim Cramer in a note to Action Alerts PLUS subscribers. "The company is increasing volumes, generating higher pricing, and raising its bar when it comes to synergy realization. Plus, Breen showed his penchant of creating value for shareholders when the company announced its aggressive $3 billion share repurchase program that will be completed in just five months' time—what a strong signal this is from management of how the stock price does not reflect the company's value."
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