Corteva Faces Challenges but Eyes Future Growth Amid Disappointing Earnings
Indianapolis-based Corteva, Inc. (CTVA) specializes in providing supplies for the agricultural sector. Their offerings help protect crops from weeds, insects, pests, and diseases while promoting overall plant health. The company operates through two segments: Seed and Crop Protection. With a market capitalization of $39.6 billion, Corteva’s reach extends across the Americas, Indo-Pacific, Europe, the Middle East, and Africa.
Corteva Underperforms Compared to Broader Market
Over the past year, Corteva has struggled to keep pace with the broader market. The stock has seen a 19.8% gain year-to-date (YTD) and a 24.1% increase over the past year, falling short of the S&P 500 Index’s impressive growth of 24.7% in 2024 and 32.3% over the last 52 weeks.
When compared to the First Trust Indxx Global Agriculture ETF (FTAG), which has seen a 7.6% decline in 2024 and a 6% dip over the past year, Corteva has fared slightly better.
Disappointing Q3 Earnings Rock Stocks
On November 6, following the release of its disappointing third-quarter earnings, Corteva’s stock dropped by 5%. The company faces challenges such as intense competition in Latin America that affected pricing and sales, alongside adverse weather conditions in Europe, the Middle East, and Africa. This resulted in a significant 10.2% year-over-year decline in net sales, totaling $2.3 billion, which was below analyst expectations.
Additionally, Corteva reported a noticeable increase in selling, general, and administrative expenses relative to net sales and was unable to reduce other costs, leading to pre-tax losses of $633 million from ongoing operations. Its adjusted loss per share of $0.49 was a staggering 58.6% under analysts’ forecasts, further shaking investor confidence.
Anticipating Future Growth and Recovery
Despite these challenges, Corteva forecasts double-digit growth in operating EBITDA by 2025, thanks to controllable factors and increased research and development investments. The company aims for an EBITDA margin of 21% to 23% by 2025.
For the current fiscal year ending in December, analysts project a 3.7% decline in adjusted earnings per share (EPS), estimating it will reach $2.59. Corteva’s earnings history is somewhat varied; it exceeded analysts’ earnings expectations in three of the last four quarters but fell short in one instance.
Analyst Ratings Reflect Cautious Optimism
Corteva stock holds a consensus rating of “Moderate Buy.” Among 20 analysts monitoring the stock, 13 suggest a “Strong Buy,” 2 recommend “Moderate Buy,” and 5 advise a “Hold” rating. This outlook is slightly more optimistic than a month ago, when only 11 analysts rated it as a “Strong Buy.”
On November 8, Barclays PLC (BCS) analyst Benjamin Theurer kept an “Equal-Weight” rating while raising the price target to $62. The mean price target for CTVA stands at $65.33, indicating a 13.8% premium over current levels, while the highest target of $71 suggests a potential upside of 23.7%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
