Global agriculture company Corteva, Inc. (CTVA) provides a range of seed, crop protection, and digital solutions. Recently, Corteva delivered better-than-expected third-quarter fiscal 2021 numbers and upped its full-year guidance on the back of higher prices and volumes.
Let us take a look at the company’s financials and understand what has changed in its key risk factors that investors should know.
Q3 Financial Results
The company’s revenue grew 28.8% year-over-year to $2.4 billion, outpacing consensus estimates by $379.9 million. During this period, Corteva saw higher sales in Latin America and North America.
Furthermore, higher volumes and robust price execution helped Corteva achieve a 72% increase in EBITDA. Meanwhile, a net loss of $0.14 per share was lower than analysts’ estimates by $0.17 per share.
For Fiscal Year 2021, Corteva forecasts net sales to be in the range of $15.5 billion to $15.7 billion, indicating a 10% increase at the midpoint over the previous year. The company expects operating earnings per share (EPS) to land between $2.05 and $2.15, indicating a 40% jump at the midpoint over the previous year. (See Insiders’ Hot Stocks on TipRanks)
Additionally, Corteva has appointed Chuck Magro as its new CEO. Earlier, Magro served as the CEO of Nutrien (NTR).
Wall Street’s Take
On November 4, Mizuho Securities analyst Chris Parkinson reiterated a Buy rating on the stock and increased the price target to $54 from $53.
The analyst remains bullish on the stock due to key factors like the ability to offset costs in a difficult environment, a higher focus on CPC pricing and increasing volume contribution from new products/spinosyns, and the ability to allocate more capital to buy-backs.
Consensus on the Street is a Moderate Buy based on 4 Buys and 2 Holds. The average Corteva price target of $54.80 implies upside potential of 14.86% for the stock.
Risk Factors
Let us take a look at what’s changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Corteva’s top risk category is Legal & Regulatory, which accounts for 29% of the total 35 risks identified for the stock. In its recent third-quarter report, the company has added two risk factors.
Under the Legal & Regulatory risk category, the company highlights that a recent executive order promoting competition in the American economy and efforts by regulatory agencies to avoid market concentrations for agricultural inputs may lead to additional regulation of the agricultural industry, imposition of higher costs and restrictions on Corteva’s operations in the future.
Secondly, under the Production risk category, Corteva notes that the transition in its CEO position will be critical to its success. If this transition is not successfully managed then the company could be negatively impacted.
The Legal & Regulatory risk factor’s sector average is 18%, compared to Corteva’s 29%. Shares of the company are up 24.8% so far this year.
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