DuPont spurned on Wall Street following disappointing guidance, expensive acquisition

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DuPont (NYSE:DD) shares declined Tuesday morning after it reported first-quarter results, along with guidance for the full year. The lackluster report sent shares lower by over 8%, making today one of the worst days for the company’s stock this year.

Concerns surrounding DuPont focused mainly on its worse-than-expected outlook, with both revenue and EPS guidance falling short of consensus views. Ebitda guidance also disappointed.

DuPont also announced a deal to acquire Spectrum Plastics Group for $1.75 billion. Not everyone viewed the takeover as a positive, due to the price, along with a preference for a focus on stock buybacks.

“We believe DD may be off on the lowered guide and high multiple M&A,” wrote BMO analysts. “Expectations were low but the softness in 2Q and FY guide as well as an acquisition at 15.6x is likely going to put the stock under pressure in the near-term.”

JPMorgan analysts said, “Weak results, albeit somewhat expected, compounded by an acquisition that runs contrary to a narrative that had been focused on buybacks as a key lever. We see a down day today.”

Morgan Stanley also expected a negative reaction in the stock.

“DuPont guided to 2Q23 EBITDA of $715M ($0.84 adjusted EPS) below both MSe of $753M ($0.87 EPS) and consensus of $754M ($0.88 EPS) noting volume pressure in electronics and construction … We expect a neutral to negative response to results and outlook,” wrote analysts.