DuPont de Nemours, Inc.

DuPont de Nemours had a challenging 2023 first quarter as organic revenue declined by 3%, although there was broad demand strength in areas including water, automotive, aerospace, and healthcare. The company did manage an all-around beat and the management has been proactive in taking actions to minimize volume pressure and focusing on optimizing cash flow generation. Despite the slowdown in short-cycle end markets, the company is confident of generating returns commensurate with top-tier multi-industrial assets. DuPont de Nemours recently announced a $1.75 billion definitive agreement to acquire Spectrum, a leading manufacturer of critical components and devices for medical end markets. This fits with their strategy to focus on the industrial technologies’ growth pillar, expanding into the fast-growing healthcare market. This acquisition is expected to generate high single-digit ROIC by year 5, excluding revenue synergies, and close by the end of the Q3 of this year. We give DuPont de Nemours, Inc. a ‘Hold’ rating with a revised target price.