Raising Corteva Fair Value Estimate to $60 on Improved Outlook; Shares Fairly Valued

Corteva generated strong second-quarter results, with adjusted EBITDA up 18% year on year. The growth was driven by price increases in excess of cost inflation and higher volumes. In addition to earnings, management announced a restructuring plan in which Corteva will exit products and geographies that make up around 5% of sales but just 1% of EBITDA. The company also plans to reorganize its manufacturing and supply chain structure to reduce costs. We are in favor of this move as it should free up manufacturing capacity for more premium products while reducing overhead costs. We have raised our near-term outlook for Corteva to incorporate higher prices and have also increased our long-term margin forecast to incorporate a greater proportion of premium products and slightly lower overhead costs.