Corteva Inc (NYSE:CTVA): A Bullish Investment Perspective

We came across a long thesis on Corteva Inc (NYSE:CTVA) on ValueInvestorsClub by Glory_Warriors. In this article we will summarize the bulls’ thesis on CTVA. The company’s shares were trading at $60.92 when this thesis was published, vs. closing price of $59.63 on Jan 13^th.

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Corteva Inc (NYSE:CTVA), a pure-play agricultural inputs company spun off from DowDuPont in 2019, is a global leader in developing innovative seed and crop protection products. While its operations span worldwide, with North America accounting for approximately half of its revenue, the majority of its profits are driven by its seed business, complemented by contributions from crop protection products.

The bull thesis is primarily driven by the argument that Corteva Inc (NYSE:CTVA) will gain share and expand margins as it rolls out its Enlist Soybean technology package and boosts its presence in the retail channel. The author believes that through the abovementioned new product, which is superior in terms of resistance, CTVA is taking share from Bayer, the once dominant leader – he argues that CTVA can expand into new regions like Brazil and Argentina, boost its presence in the US and generate new streams of licensing revenues with other US producers, which will result in more than $200 million incremental EBITDA through 2027. Another important driver of the bull thesis is that CTVA will benefit from falling crop prices which will lead to COGS deflation and a substantial boost to margins – the author claims that corn and soybean prices are down more than 30% vs. 2021-2022 and will further decrease in 2025-2026 as crop hedges roll off.

All in all, the author estimates that Corteva Inc (NYSE:CTVA) will generate superior, out of consensus revenue growth until 2026, which coupled with a 5-percentage point expansion in the Gross Margin will put the company’s 2026 EPS at $5.00. A target P/E multiple of 20.0x is assigned, leading to a $100.00 target stock price by YE2026. Discounted back, the target stock price stands at $83.00, or 39% upside from the current market price.

While we acknowledge the potential of CTVA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CTVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.