Earnings Preview: DuPont

OVERVIEW: DuPont expects revenue growth rates to increase as its research delivers innovations. A DuPont executive told investors last month that the company sees clear opportunities to grow revenue 7 percent to 9 percent per year between 2007 and 2010.

The Wilmington, Del., company expects some of that growth to be fueled by an increased demand for renewable energy sources such as solar photovoltaics and cellulosic ethanol.

DuPont expects sales to photovoltaic customers within five years will exceed $1 billion--up from the current $300 million. The company is also partnering with BP to commercialize biobutanol, an alternative fuel that could be blended in existing car engines at higher percentages than ethanol.

BY THE NUMBERS: Analysts polled by Thomson Financial expect second-quarter earnings of $1.07 per share and revenue of $8.47 billion.

ANALYST TAKE: Dow Chemical Co.'s July 10 announcement that it would pay about $15.29 billion for Rohm and Haas Co. is leading one Citigroup analyst to believe that DuPont is undervalued.

P.J. Juvekar, in a research note to investors, said that based on the 74-percent premium Rohm and Haas shareholders received from Dow, DuPont shares could be worth $60 on a sum-of-the-parts basis.

But Juvekar is maintaining a "Hold" and a price target of $47, saying it appears management would not be willing to take the drastic steps of breaking up the company.

Goldman Sachs analyst Robert Koort has a "Buy" rating and a $52 price target on DuPont, noting risks of a global economic slowdown, volatile raw materials and intense competition in agriculture.

STOCK PERFORMANCE: Shares of DuPont lost about 8 percent during the quarter, finishing the month of June at $42.89.