Analyst Note| Seth Goldstein, CFA |
Corteva reported solid first-quarter earnings, as operating EBITDA was up 14% versus the prior-year quarter. The growth was driven by higher prices and volumes as well as a greater proportion of premium products in both seeds and crop protection. Management raised its revenue guidance to account for higher crop protection sales but left full-year operating EBITDA and operating EPS guidance unchanged, as higher input costs would offset the improved sales. Given the favorable ag backdrop with higher crop prices, we think Corteva should benefit from higher volumes in both seeds and crop protection as farmers plant more crops this year. As such, we have increased our forecast and now expect profits to come in at the high end of management's guidance range. After updating our model to incorporate the first-quarter results, we raise our Corteva fair value estimate to $45 per share from $44. Our wide moat rating is unchanged.