BofA Merrill Lynch upgrades Dupont from Buy to Neutral, $70.00 PO

In a report published Thursday, Bank of America Merrill Lynch analyst Kevin McCarthy upgraded Dupont De Nemours and Co. DD to Neutral from Buy, with a $70.00 price objective. According to the report, DD trades at a 2014 P/E multiple of 14.5x, which represents an 11 percent discount to comparable companies and a 3 percent discount to DD's 10-year average notwithstanding numerous ongoing upgrades to the portfolio in recent years “As a global bellwether in specialty chemicals, we believe DuPont stands to benefit from a confluence of favorable circumstances as we enter 2014: (1) projected acceleration of global growth; (2) ongoing portfolio improvement via the pending separation of Performance Chemicals; (3) growing financial flexibility that should support future dividend increases pro forma for the spin-off; and (4) inexpensive valuation relative to history and industry peers,” The report said. “Our revised PO of $70 suggests upside potential of 14%, including a dividend yield of 2.9%.” The report went on to further note that financial flexibility is high and improving. DD has also de-leveraged in recent years with positive implications for dividend growth. The combination of an upgraded portfoloio and an upgraded balance sheet gives us confidence that DD can grow its dividend commensurate with earnings. DD closed Wednesday at $63.13.
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Posted In: Analyst ColorUpgradesAnalyst RatingsBank of America Merrill LynchKevin McCarthy
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