Analyst Note| Seth Goldstein, CFA |
Corteva reported strong second-quarter results. Operating EBITDA was up 18% year on year, driven by higher prices and volumes in both seeds and crop protection. We have slightly increased our near-term profit forecast to account for a greater proportion of premium product sales this year and in 2022 than we had previously forecast. Separately, we have increased our tax rate forecast to incorporate the effect of a higher U.S. corporate tax rate. After updating our model to reflect these changes, we are raising our fair value estimate for Corteva to $47 per share from $45. Our wide moat rating is unchanged. At current prices, we view Corteva shares as fairly valued, with the stock trading slightly below our fair value estimate but in 3-star territory.