Stock Market Today, Oct. 6: Corteva Rallies 12% on Analyst Upgrade Following Spin Off
Corteva (NYSE:CTVA), a pure-play crop protection provider, closed at $13.91, up 12.27% after JPMorgan upgraded Corteva in premarket trading. Investors are watching how the company will fare as a stand-alone company, now separate from its seed genetics business. Trading volume reached 38.9M shares, coming in about 285% above its three-month average of 10.1M shares.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) closed at 7,820, up 0.59%, while the Nasdaq Composite (NASDAQINDEX:^IXIC) finished at 27,600, up 0.45%. Among agricultural inputs peers, Bayer (OTC:BAYRY) closed at $12.45, up 0.40%, and FMC (NYSE:FMC) closed at $9.02, up 0.22%; the group stayed on investors’ radar as Corteva’s upgrade and index reshuffling drew attention.
What this means for investors
It looks like Corteva is quickly becoming a Joel Greenblatt “special” of sorts following its recent separation from Vylor. While Vylor split with the “more interesting” business of seed genetics and a century-old germplasm library, Corteva’s discounted, pure-play crop protection operations are worthy of not being forgotten about — at least according to an analyst at JPMorgan.
Setting a $19 price target on CTVA stock, JPMorgan’s bullish outlook on Corteva helped the latter’s share jump 12% today. While uncertainty surrounds Corteva due to PFAS and PFOA legal liabilities inherited from its past ties to DuPont, JPM believes these costs should peak at $1.3 billion, or roughly $2 per share for Corteva, according to its modeling.
JPMorgan’s $19 price target on CTVA stock reflects this expected impact, implying it still sees 37% upside in the stock. Trading at just 5.7 times the company’s estimated 2027 EBITDA, Corteva might be an interesting deep-value opportunity for investors comfortable operating in this industry, but the legal liabilities worry me too much, personally, even with the company’s pristine balance sheet.
Should you buy stock in Corteva right now?
Before you buy stock in Corteva, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Corteva wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $364,023!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,467,933!*