Morgan Stanley analyst Vincent Andrews has maintained their neutral stance on DD stock, giving a Hold rating on August 29.
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Vincent Andrews has given his Hold rating due to a combination of factors surrounding DuPont de Nemours’s recent strategic decisions. The company announced the sale of its Aramids business, which includes the Kevlar and Nomex brands, to TJC’s Arclin for a total consideration of $1.825 billion. This transaction is seen as beneficial for DuPont as it removes a lower growth and margin segment from its portfolio, aligning with the planned spin-off of its electronics business, Qnity, scheduled for November 1.
Despite the potential advantages of this sale, there are financial implications to consider. The transaction is expected to result in a high-single-digit percentage capital gains tax, reducing the after-tax proceeds. Additionally, while the proceeds could be used for mergers and acquisitions or share buybacks, the company might prioritize water-related acquisitions if opportunities arise. Furthermore, the transaction involves a note receivable and an equity interest in Arclin, both of which have uncertain timelines for monetization. These factors contribute to the Hold rating, indicating a balanced view of the potential risks and rewards for investors.
Andrews covers the Basic Materials sector, focusing on stocks such as Sherwin-Williams Company, Cf Industries Holdings, and Eastman Chemical. According to TipRanks, Andrews has an average return of 4.4% and a 62.87% success rate on recommended stocks.
In another report released on August 29, Bank of America Securities also reiterated a Hold rating on the stock with a $84.00 price target.