DuPont (DD) Stock Declining Today on Analyst Downgrade Amid Proxy Fight With Trian

NEW YORK (TheStreet) -- Shares of E. I. du Pont de Nemours and Co.  (DD) are down 2.17% to $78.75 on heavy volume in late morning trading Monday after analysts at Bank of America/Merrill Lynch downgraded shares of the chemical conglomerate to "underweight" from "buy" this morning.

The firm maintained its $76 price target and cited valuation for the ratings cut. "DuPont has outperformed the chemicals sector and the broader market year to date," it noted.

Analysts at BofA/Merrill said that DuPont is facing fundamental headwinds in both agriculture and chemicals, along with financial challenges.

The fundamental and financial challenges include price pressures as certain growers trade down to less expensive seeds, a likely decline in U.S. planted corn acreage, pockets of elevated channel inventory in crop protection chemicals, the risk in Ukraine, and the stronger U.S. dollar.

The firm also cut its earnings estimates for 2015 and 2016 to $4 per share and $4.30 per share, respectively. Both figures fall below the consensus estimate of $4.09 per share for 2015 and $4.56 per share for 2016.

BofA/Merrill added, "We view the largest risk to our more cautious posture as the ongoing engagement of activist Trian, which could lead to acceleration of cost cuts, and possibly further reshaping of the portfolio or a break-up of DuPont if Trian prevails."

Oppositely, TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "I am very concerned that if Nelson Peltz were to lose the proxy fight this stock will keep falling given that all chemical companies have been weaker of late except this one. If you think he will lose you should sell the stock."

On Friday, DuPont rejected hedge fund Trian Fund Management's proposal in a letter to activist investor Nelson Peltz to add two nominees each to the chemical company's board and the board of Chemours, Reuters reported.

The company said it would accept John Myers, one of Peltz's nominees, to end a proxy fight with Trian. But, Peltz wants two of his nominees, including himself, on the board and two on the board of Chemours, the performance chemicals business DuPont plans to spin off, Reuters added.

"By the way anyone who has bought a stock AFTER Nelson Peltz has filed that he has a stake and is active has beaten the S&P 500, but this time he may have already made you all the money that can be made if he isn't put on the board," Cramer added.

Following Cramer's interview with Peltz on CNBC's Squawk on the Street last Thursday, activist investor Carl Icahn tweeted:

Trian has a 2.7% stake in DuPont, and has been pushing the company to spin off its volatile materials business.

About 4.89 million shares of DuPont have exchanged hands as of 11:21 a.m. ET today, compared to its average trading volume of about 4.61 million shares a day.

Wilmington, DE-based DuPont is a chemical company with multiple segments including agriculture, electronics and communications, industrial biosciences, nutrition and health, performance chemicals, performance coatings, performance materials, safety and protection, and pharmaceuticals.

The company uses numerous suppliers as well as internal sources to supply a wide range of raw materials, energy, supplies, services and equipment.

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