DuPont Will Continue To See Robust Growth

DuPont (NYSE:DD) is scheduled to report its Q2 2017 earnings on July 25. The company has gained some momentum in the last couple of quarters, and is likely to sustain it in Q2 as well. We expect higher volumes across segments, with meaningful pricing gains in agriculture and industrial biosciences. DuPont’s agriculture division is likely to benefit from higher soybean acreage. The U.S. Department of Agriculture estimates that soybean acreage in the U.S. will increase nearly 7% this year, while corn acreage will decline by 3%. ^[1] The agriculture segment grew nearly 4% in the first quarter, with half of the growth coming from price increases driven by gains in Brazil, and the expansion of Pioneer brand seeds and Leptra crop protection products. The Pioneer brand soybean seeds, and improved sunflower seed sales, will help offset weakness in corn. We estimate that the agriculture division accounts for nearly 40% of DuPont’s value.

Our price estimate of $83 for DuPont is in line with the market.

DuPont’s performance materials segment is likely to see some volume gains driven by increased demand in the automotive market in Europe and China, as well as an increase in market share. In addition, DuPont will continue to benefit from increased demand in the semiconductor and aerospace markets. However, the growth rate of sales from these markets is likely to slow down in the second quarter as compared to the first. However, the extent of the slowdown is unlikely to be alarming.

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1. USDA Reports Record High Soybean Acreage, Corn Acres Down, USDA, June 30 2017 [↩]