DuPont Shares Decline After Barclays Downgrades on Valuation and Breakup Concerns

Shares of DuPont de Nemours experienced a decline of 2.9% in pre-market trading on Monday following a downgrade by Barclays, which moved the stock rating from “equal weight” to “underweight.”

Barclays analysts raised concerns about the company’s valuation, suggesting it has reached its peak amid recent market optimism. They noted that DuPont’s shares have risen to multi-year highs, but cautioned that the upcoming quarters may introduce greater uncertainty.

This situation, along with limited support for stock buybacks and increased market volatility, could lead to potential underperformance for DuPont.

A significant factor in the downgrade is DuPont’s intention to split into three separate entities. Barclays analysts pointed out that, while many investors are optimistic about high valuations for the company’s divisions—especially the Water and Electronics units—there is skepticism regarding whether DuPont’s remaining core businesses, referred to as RemainCo, will achieve higher multiples. This concern is particularly relevant given that RemainCo consists of more cyclical and industrial sectors, which might struggle in the face of broader market uncertainties.

The analysts also highlighted that the company’s fundamentals appear “choppy,” particularly in sectors like Electronics and broader industrials, which are facing slower growth. They expressed worries about DuPont’s cash conversion rates, PFAS liabilities, and potential dis-synergies as the company advances with its split.

While the leadership transition at DuPont—specifically the former CEO’s move to the role of Executive Chairman—has generally been positively received by investors, it raises questions about the performance of the new management amid the complexities of the company’s multifaceted separation.

Additionally, Barclays adjusted its price target for DuPont from $88 to $84, indicating about a 4% downside from its previous price. Analysts remain cautious regarding the company’s potential for significant equity upside, particularly as investors await more information about the impending spin-off and leadership transitions in the coming months.