Wall Street analysts made the wrong call on DuPont, but it may be welcome news for investors looking to buy the stock. The stock dropped 2% on Monday. Barclays cut the materials name to a sell-equivalent rating from hold and trimmed its price target by $4 per share to $84, which is below current levels. Analysts advised taking profits after DuPont’s climb to highs in late September, levels not seen since June 2017 — citing concerns about management’s plan to break up the firm into three publicly traded companies. “After recent bullishness has lifted shares to multiyear highs, we think the next few quarters offer more uncertainty and limited buyback support against full valuation, driving underperformance,” Barclays wrote in a note to clients, adding that sum-of-the-parts analysis “leaves little room for upside.” Jim Cramer on Monday described this downgrade as “moronic.” Jim is on record saying he would consider buying more DuPont for the Club if the selloff were to steepen. The market reaction is overblown. Aside from DuPont’s solid fundamentals, Jim thinks the breakup catalyst remains intact in direct opposition to the Barclay’s view. DD YTD mountain DuPont YTD Back in May, when the split was announced , Jeff Marks, director of portfolio analysis for the Club, said, “DuPont has these great secularly growing electronics and water businesses that it never got any Street credit for as a conglomerate.” He added at the time, “By separating these businesses into individual publicly traded companies, the market should apply multiples closer to peers and well above DuPont’s current valuation, unlocking a lot of trapped value.” Jim and Jeff still feel that way and would be buyers of DuPont for more than just the upcoming split. The company in late July reported strong quarterly earnings and delivered a guidance raise. The financials highlighted another reason to stay optimistic about DuPont — a recovery in its electronics business, which should continue to improve with the rise in artificial intelligence adoption and China’s big stimulus plans. But, what level, specifically, would we be buyers? DuPont stock, trading around $85 per share Monday, would have to fall at least another 6% to below $80 to interest us. The Club previously bought more of the material giants on Aug. 5 when shares traded around $77. “Anytime you see DuPont below $80 you have to grab it,” Jim said during the Club’s September Monthly Meeting. “That’s where it was when it reported that terrific quarter and it is breaking itself into three pieces that I think combined are worth $100.” “This stock could have a very good run into 2025 as it becomes clear that the three segments are worth far more than the current price,” Jim said. The Club has a $100-per-share price target on DuPont. (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 . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Wall Street analysts made the wrong call on DuPont, but it may be welcome news for investors looking to buy the stock.