Company Reports

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products. Seeds generated around 60% of profits in 2023, with the remaining 40% coming from crop protection. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

Corteva's fourth-quarter results and management's outlook for 2024 and 2025 were in line with our near- and long-term outlook for the company. Our thesis had been that the inventory destocking in crop protection would prove temporary and Corteva's differentiated portfolio, which underpins our wide moat rating, would drive long-term growth through improved pricing and profit margin expansion.

DuPont, Corteva, and Chemours announced a settlement agreement with the state of Ohio for $110 million to help the state restore its natural resources. The deal resolves the state's claims against the company regarding the manufacture and sale of per- and polyfluoroalkyl substances, or PFAS, as well as the state's claims against the companies related to aqueous film-forming foam, or firefighting foam.

Corteva's detailed third-quarter results confirm our initial view that the company is likely to face a continued profit decline in 2023 due to an industrywide crop chemicals inventory reset. The company had released preliminary revised earnings expectations in late October. With our outlook unchanged, we maintain our $67 fair value estimate and wide moat rating.

Corteva reported high-level third-quarter results that were below the low end of guidance. Management also issued revised 2023 guidance with a lower outlook due to continued inventory destocking leading to lower sales volumes, particularly in Brazil, than the company had previously forecast. We have updated our model for a lower near-term outlook, and we have reduced our Corteva fair value estimate to $67 per share from $70. Our wide moat rating is unchanged.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products, both of which generate around half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

We maintain our $70 fair value estimate for Corteva after updating our model to incorporate the company's second-quarter results. Our wide moat rating is unchanged. We view the shares as currently undervalued, trading in 4-star territory at a roughly 20% discount to our fair value estimate.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products, both of which generate around half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

DuPont, Corteva, and Chemours (which we collectively refer to as "Historical DuPont") announced a settlement to resolve the vast majority of current perfluoroalkyl and polyfluoroalkyl substances, or PFAS,-related drinking water claims for U.S. water systems where the so-called forever chemicals have either been detected or are subject to monitoring. The settlement totals $1.185 billion, of which DuPont and Corteva will have to pay $400 million and $193 million, respectively.

We maintain our $70 per share fair value estimate for Corteva after updating our model to incorporate the company's strong first-quarter results. Our wide moat rating is also unchanged. At current prices, we view Corteva shares as slightly undervalued with the stock trading about 15% lower than our fair value estimate and in 4-star territory.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products. In 2022, seeds and crop protection each generated around half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

We maintain our $70 per share fair value estimate for Corteva following the company's fourth-quarter results. Our wide-moat rating is also unchanged.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products. In 2022, seeds and crop protection each generated around half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

Having updated our model to include the Stoller acquisition, we maintain our $70 per share fair value estimate for Corteva as the deal is value neutral. Our wide-moat rating is also unchanged. The $1.2 billion cash acquisition deal values Stoller at a 12 times enterprise value/EBITDA multiple. Based on PitchBook data for comparable deals, we view this multiple as in line with the average of other deals.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products. In 2021, seeds generated a little more than half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

We are maintaining our $70 per share fair value estimate as Corteva's third-quarter results were in line with our outlook for the cadence of the year. Corteva's results in the quarter demonstrated the company's strong pricing power, which underpins our wide-moat rating. During the quarter, which has historically featured operating losses, Corteva generated nearly $100 million in operating EBITDA and positive operating earnings per share as higher prices more than offset cost inflation. The results are also in line with our long-term thesis that Corteva's expanding portfolio of premium products will lead to profit growth over time.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in seeds and crop protection products. In 2021, seeds generated a little more than half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

We raise our Corteva fair value estimate to $70 per share from $60 following the company's investor day. The key drivers behind our outlook are increased profitability in both the seed and crop protection businesses. We maintain our wide moat rating. At current prices, we view shares as slightly undervalued with the stock trading nearly 10% below our updated fair value estimate but in 3-star territory.

Corteva is an agriculture pure play that was formed in 2019 when it was spun out of DowDuPont. The company is a global leader in the development of new seed and crop chemicals products. In 2021, seeds generated a little more than half of total company profits. Corteva develops its pipeline through the investment of around 8% of sales in research and development, which should allow sales and profits to grow from new products even as patents expire and generic products come to market.

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.