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Agricultural chemical and seed company Corteva’s (NYSE:CTVA) shares were moved from Neutral to Overweight by a JPMorgan analyst on Monday.
The analyst also boosted the firm’s price target on the stock to $63 from $58 per share, stating in a research note that the company has several tailwinds.
Corteva reported earnings last week, topping the consensus estimate for earnings and revenue.
“There are a number of tailwinds converging for Corteva in 2023, and fewer headwinds. The strength in the prices of corn and soy should allow the company to price its seed products higher for 2023, and seed volumes should be positive,” wrote the analyst. “Farmers are more likely to plant more corn in 2023 given a shortened planting season in 2022 and good grain prices.”
The analyst went on to say that corn is a more nutrient-intensive crop and the returns on corn seeds tend to be higher, while Corteva’s crop chemical portfolio is also likely to grow because of new offerings, which have positive price characteristics.
“Corteva’s EPS should increase more than 20% to $2.60 in 2022 up from $2.15. We expect EPS is likely to rise 17% from $2.60 to $3.05 in 2023. We look for adjusted EBITDA to rise from $3.1b in 2022 to $3.35b in 2023 or by about 9%. The balance sheet is in a net cash position. We expect Corteva to generate about 5% of its share price in free cash flow in 2023,” concluded the analyst.
