DuPont's Gains Push the Dow's Week-Ending Climb

Investors welcomed a strong close-out to the week today, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) finished the day up 63 points, or nearly 0.4%. Most blue-chip members of the index ended up in the green, with DuPont (NYSE: DD  ) among today's better gainers as the stock jumped 0.9%. Meanwhile, Pfizer (NYSE: PFE  ) fell to the bottom of the Dow today, with the big pharma stock dropping 0.6% in the wake of its failed attempt to acquire AstraZeneca. Let's catch up on what you need to know.

Will Pfizer follow up its AstraZeneca failure with a new buyout push?
Pfizer's attempts at luring AstraZeneca into a merger seem all but dead now, but don't expect this pharmaceutical giant to stand pat going forward. The company's pipeline boasts 27 phase 3 or later programs as of its most recent update in late February. Pfizer, however, is facing a lack of many high-potential blockbusters in that pipeline, with the exception of highly touted breast cancer therapy palbociclib, which analysts have estimated at peak sales of up to $4 billion or more.

Given that Pfizer has tens of billions of dollars in overseas untaxed profits, however, it wouldn't be surprising to see Pfizer make a move to beef up its product portfolio and pipeline with a major acquisition in the near future -- even if it isn't on the same scale as a merger with AstraZeneca. Given this company's struggles to reverse recent sales declines, investors should expect more action to come on Pfizer's front.

DuPont made the most of the Dow's day, unlike Pfizer, and investors are looking forward to the company's final decision regarding its lackluster performance chemicals division. While DuPont's committed to spinning off this unit -- a move that company leadership indicated currently is on track -- this firm's also looking at other options, including a potential sale of the business. The performance chemicals unit hasn't exactly been a growth segment for DuPont: It saw sales decline by 3% year over year in the company's most-recent quarter. With industrial chemical demand and pricing volatile, DuPont is angling to divest the business in order to reinforce stability in its future earnings. While investors might miss a unit that was DuPont's third-largest by sales in its most-recent quarter, the company's long-term growth prospects in its agricultural group -- by far its largest by revenue -- should keep this firm and stock headed in the right direction for years to come.

Source: Wikimedia Commons

Outside of the Dow today, GameStop (NYSE: GME  ) stock jumped 4.2% after the company reported earnings. The video game retailer missed analyst expecations on its top line, but a 7% overall rise in revenue, boosted by the ongoing success of Microsoft's and Sony's new Xbox One and PlayStation 4 consoles, delighted investors today, and powered up a stock that's slipped by more than 25% since the start of 2014. While new game software sales fell sharply by more than 20% for the quarter, title releases for the newest generation of consoles have been limited since the Xbox One and PS4 launched late last year. With a lineup of highly touted game titles set to release in the near future -- including Ubisoft's Watch Dogs next week, a game GameStop said had broken records as the most pre-ordered video game in the young life of the newest consoles -- this retailer will have a chance to keep up its momentum.

In the long run, however, it's wise to exercise caution with GameStop. With digital sales gaining acceptance around the video game industry, this company will need to keep adapting to complement its brick-and-mortar physical sales in order to satisfy investors.

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  • Report this Comment On May 24, 2014, at 7:42 AM, funfundvierzig wrote:

    "...the company's [DuPont's] long-term growth prospects in its agricultural group..." may be somewhat blunted. In trying to copycat Monsanto, DuPont's lumbering leadership TEAM is coming to the ag party a decade too late. At this point, DuPont is a pronounced laggard to superior-managed Monsanto in seed production and biotechnology.

    Moreover, DuPont is an also-ran to Syngenta and Bayer in crop protection and ag chemicals. Nor is DuPont any match for front-running Scotts MIRACLE-GRO in retail lawn and garden products.

    Sans chemicals, DuPont will lose a huge $7 billion in annual revenues, 20% of total DuPont revenues, as well as a substantial contribution to cash flow and the Company's obese overhead.

    ...funfun..

  • Report this Comment On May 24, 2014, at 8:20 AM, funfundvierzig wrote:

    In Q1 2014, DuPont's much touted DuPont AG segment posted a significant decline in sales, down 6%, down 7% by volume, year over year. In contrast in the same global climate, Monsanto in its most recent reported quarter delivered solid growth in revenues and profits.

    Every year, DuPont must shell out hundreds of $millions in license fees to Monsanto in order to put Monsanto's superior genetically-modified seed traits into DuPont Pioneer's otherwise inferior seed line-up.

    It appears the gap between front-running Monsanto and the enervated DuPont conglomerate is widening. Investors and analysts need to slice through the Teflon curtain of slick public relations hype and hokum to perceive the commercial reality of this shrinking old-line conglomerate based in Delaware. ...funfun..

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