On Thursday, Mizuho Securities maintained a Buy rating on DuPont de Nemours Inc. (NYSE:DD) and raised its price target to $100 from the previous $83 for the shares.
This adjustment follows DuPont's announcement regarding its plan to divide into three independent, publicly traded entities, each focusing on different market segments.
DuPont revealed its intention to restructure into three separate companies, a move aimed at streamlining operations and enhancing shareholder value.
The new entities, named New DuPont, ElectronicsCo, and WaterCo, will each take over specific portions of the current business, with distinct financial profiles projected for the year 2023.
New DuPont is expected to generate approximately $6.6 billion in sales and $1.5 billion in EBITDA, with an EBITDA margin of around 24%. This company will consist of the existing Water and Protection segment—excluding Water Solutions—the majority of the Industrial Solutions segment, and the businesses currently reported in Corporate, including Adhesives.
ElectronicsCo, with an anticipated $4 billion in sales and $1.2 billion in EBITDA, will boast a higher EBITDA margin of approximately 29%. It will include the current Semi Technologies, Interconnected Solutions businesses, and electronic-related businesses within the Industrial Solutions.
Lastly, WaterCo is set to comprise the current Water Solutions business, expecting to reach around $1.5 billion in sales and $360 million in EBITDA, maintaining an EBITDA margin close to 24%.
The price target increase to $100 is based on a sum-of-the-parts (SOTP) valuation, reflecting the anticipated value creation from the planned separation of DuPont's businesses. This strategic move is anticipated to unlock the potential of each segment, providing a clearer focus and growth trajectory for the new standalone companies.
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