Du Pont focuses on what's important: profitable operations

Posted Jan 15th 2008 5:43PM by Joseph Lazzaro
Filed under: duPont(E.I.)deNemours (DD), Agriculture, Stocks to Buy

Change is rarely easy for any corporation, and when you're the size of Du Pont, it's practically an undertaking of epic proportions.

E.I. du Pont de Nemours & Company (NYSE: DD) is the No. 3 chemical maker in the U.S. Analysts say DD's restructured business operations, which reduced its business units to 5 from 8, including an exit from the pharmaceutical and fibers business, should begin to produce results in 2008.

Analysts see 2008 revenue advancing about 5%-8%, after a 5-7% gain in 2007. DD's agriculture segment will continue to shine, with revenues increasing about 10-12%, aided by strong seed sales. Further, global chemical demand should offset softness in the U.S. The Reuters FY 2007/FY 2008 EPS consensus estimates for DD are $3.19 to $3.41.

The risks? DD faces headwinds from the slowing U.S. economy, and higher raw material costs. Market share declines also are expected to continue in DD's corn seed market.

The First Call mean rating for DD is: Buy [15 firms]. Mean 2008 target: $51.00 [high: $56, low: $46].

Stock Analysis: Du Pont is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from DD's shares. Sell/Stop Loss if you were to purchase shares in this company: $29

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: chemicals, DD, Du Pont, emerging markets, seeds