We’re raising our DuPont price target after a beat and raise and ahead of breakup
DuPont reported a solid quarter Tuesday morning, and the Club stock initially popped. Shares then pared their early gains as the broader market moved lower. In our view, the price action represented a buying opportunity because we basically got to see this great quarter for free ahead of further upside into the coming spin-off of the electronics business. We bought 100 more shares as indicated in our earlier trade alert . Here is how the quarter stacked up. Net sales rose a little under 3% year over year to $3.26 billion, topping estimates of $3.24 billion, according to LSEG. Adjusted earnings per share (EPS) came in at $1.12, ahead of the $1.06 consensus estimate, LSEG data showed, representing growth over 15% versus the year-ago period. Why we own it DuPont represents an industrial way to play the recovery in semiconductors and electronics, which have strong multiyear outlooks due to advancements in artificial intelligence. DuPont’s plan to break itself up has sweetened the fundamental investment case. Competitors: 3M , PPG Industries Portfolio weighting: 3.28% Most recent buy: Aug. 5, 2025 Initiated: Aug. 7, 2023 Bottom line It was a strong showing from DuPont with earnings outpacing expectations, thanks to strong profit margin expansion. Cash flow also beat. As a result, management raised its outlook for the full year, even as it baked in a $20 million headwind resulting from tariffs. That tariff headwind is expected to be split evenly between the third and fourth quarters. For the IndustrialCo segment, sales came up a bit short, but profit expectations beat, thanks to EBITDA margin performance of 24.4%, which expanded 44 basis points year over year. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. While the ElectronicsCo EBITDA margin performance of 31.9% was a bit less than expected, the result still represented a 217 basis point year over year expansion. Strong revenue in the ElectronicsCo led to an operating EBITDA beat in the segment. On the call, CEO Lori Koch noted strong electronics results in both semiconductor solutions and interconnect solutions, on the back of artificial intelligence technology demand. IndustrialCo saw solid demand in health care and water, though the diversified industrial sub-segment was held back by construction end market weakness. Koch said these dynamics continued into the current (third) quarter, “with order patterns remaining strong through July.” She added, “Weakness in construction continued to impact our diversified industrials business during the quarter.” DuPont reaffirmed its Nov. 1 target date for the electronics spin-off, which will be known as Qnity. Management is scheduled to host an Investor Day on Sept. 18 to introduce the new DuPont and Qnity. Given the upcoming break-up catalyst, along with a strong quarter and full-year guidance raise, we’re reiterating our buy-equivalent 1 rating and raising our price target to $90 per share from $82. The PT boost reflected an update to our sum of the parts (SOTP) analysis based on (1) current full year estimates and (2) the enterprise value to EBITDA trading multiple of advanced materials peer Entegris , less 10% to keep our target conservative. Entegris is the proxy we have been using for the DuPont electronics operation that will become Qnity. DD YTD mountain DuPont YTD Guidance In addition to raising full-year EPS guidance, DuPont’s outlook for the third quarter was also ahead of expectations, with management forecasting net sales to be roughly $3.32 billion, slightly better than the $3.3 billion estimate, according to LSEG. Operating EBITDA is expected to be approximately $875 million, better than the FactSet consensus estimate of $863 million, while adjusted EPS was guided to about $1.15, which is a penny better than expectations, according to LSEG. Digging in on the full-year outlook, management expects operating EBITDA of about $3.36 billion — versus a prior range of $3.33 billion to $3.38 billion — better than the $3.32 billion expected, according to FactSet. Adjusted EPS is seen raising to about $4.40 per share — versus $4.30 to $4.34 previously — outpacing the $4.28 consensus estimate, according to LSEG. The company expects sales of about $12.85 billion, versus a prior range of $12.8 billion to $12.9 billion, and $12.85 billion midpoint — better than the $12.79 billion consensus estimate, according to LSEG. Importantly, while the revision to full-year earnings looks small, it’s important to note that management was previously excluding an estimated $60 million, or 10-cent per share, headwind resulting from tariffs. The team now sees that drag down to a $20 million, or 4-cent per share, assumption for the back half of the year. (Jim Cramer’s Charitable Trust is long DD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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