Friday, Oppenheimer adjusted its outlook on shares of Corteva Inc. (NYSE:CTVA), increasing the price target to $69.00 from the previous $67.00 while reaffirming an Outperform rating. The firm's analysis indicates that Corteva commenced the year strongly, with expectations to meet its full-year 2024 guidance and advance towards its 2025 value creation goals.
Corteva's strategy to prioritize pricing over volume has been effective in mitigating the impact of first-quarter volume declines, which were attributed to challenging comparisons from the previous year and ongoing channel adjustments in Latin America. The company's approach has been essential in balancing the initial softness in volume.
Looking ahead, the easing of volume comparisons and sustained demand in the end markets are likely to contribute positively to Corteva's performance. Additionally, the deflation in raw material prices, coupled with the benefits derived from the company's restructuring efforts, are anticipated to bolster EBITDA growth in the second half of the year. These factors are expected to fortify Corteva's position as it approaches 2025.
Despite Corteva's robust year-to-date stock performance and the growing confidence in its prospects for 2024 and 2025, the valuation is still considered to be at a discount. This perception is partly due to the limited visibility in Latin America, which has a notable effect on the EBITDA forecast. However, there is a belief that there is considerable potential for an expansion in the company's multiple.
In light of these observations and a slightly improved EBITDA outlook, Oppenheimer has decided to raise the price target for Corteva. This new target reflects the firm's expectation for Corteva's continued financial improvement and market performance.
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