On Jan 24, 2013, we upgraded our recommendation on chemical
) to Neutral based on its better-than-expected fourth-quarter
2012 results and improved prospects.
AIR PRODS & CHE (APD): Free Stock Analysis
(ARKAY): ETF Research Reports
BASF SE (BASFY): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
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Why the Upgrade?
DuPont, on Jan 22, posted adjusted earnings from continuing
operations of 11 cents per share for the fourth quarter, beating
the Zacks Consensus Estimate by a couple of cents. Net sales were
essentially flat year over year at $7,325 million but exceeded
the Zacks Consensus Estimate of $7,253 million.
Following the release of the forecast-topping fourth quarter
results, the Zacks Consensus Estimate for 2013 rose 3.7% to $3.92
per share. Moreover, the Zacks Consensus Estimate for 2014 moved
up by 3.8% to $4.35 per share.
DuPont, which carries a Zacks Rank #2 (Buy), is witnessing
strength in its agriculture and food businesses. Despite
unfavorable currency exchange swings, the Agriculture segment
delivered healthy sales in the fourth quarter boosted by higher
volume and strong performance of the crop protection business.
The company expects continued strong growth in crop protection in
2013 to be driven by new products.
Moreover, DuPont should continue to benefit from the synergies of
Danisco acquisition. The acquisition contributed to the growth
across its Industrial Biosciences and Nutrition & Health
divisions in the fourth quarter.
DuPont also has a healthy balance sheet and remains committed to
boost shareholder returns. It will also continue to benefit from
its aggressive restructuring actions.
That said, we also account for the weakness across titanium
dioxide and photovoltaic markets. The company is also exposed to
raw material cost inflation and currency headwinds.
Other Stocks to Consider
In addition to DuPont, other stocks in the chemical industry that
are currently performing well include
). While both Arkema and BASF retain a Zacks Rank #1 (Strong
Buy), Air Products holds a Zacks Rank #2 (Buy).