After The Wall Street Journal reported that Corteva (CTVA) is exploring the separation of its seed and crop chemical franchises, BofA said that the integrated seed/CP model is the “gold standard” in crop inputs given the highly synergistic nature and contends that this is more relevant as biologics and seed treatment technologies proliferate. Given this view, the firm does not see the financial or strategic merits of a potential break-up, the analyst tells investors. In addition, the current valuation doesn’t show immediate value creation through a sum-of-the-parts analysis and the firm believes that any separation would “possibly create two weaker entities,” says the analyst, who has a Buy rating and $79 price target on Corteva shares.
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