A Falling Stock To Pick Up At Lower Prices: DuPont
A multinational chemical concern suddenly lost more than 13% of its market value in the week prior reporting earnings on February 1. The share price plunge came following the company's management warning on January 24 that its quarterly balance may be short of $220 million to $370 million "from continuing operations", as per its own preliminary estimates, vs a previous profit of more than $100 million a year ago.
DuPont CEO Ed Breen foresaw Q1 2024 sales below Wall St pool estimates, expecting revenues of only $2.8 billion year-to-date at the end of March against consensus of $3.04 billion on average before the news came, according to LSEG data. In a statement, he cited excessive channel inventory destocking within the company's industrial businesses as well as continued weak demand in China. Ed Breen pointed to the current tendency when more customers are still clearing extra stockpiles built up during the corona pandemic, decreasing the volume of new orders. The company also took a non-cash goodwill impairment charge of between $750 million and $850 million at a unit of its water and protection segment "due to market conditions".
At the moment, DuPont's dip prospect for the nearest months led its share price to the lowest levels since May 2023. Yet, the current price discount doesn't look big enough to buy here and now. Levels that are more attractive could be expected later, after the market crowd eventually digests the signs of weakness. The dips of September 2023 were located slightly above $50 per share, so that a $52-55 area could serve as possible technical support to collect more intensive purchase orders, awaiting lasting stabilization and recovery after difficult times.
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