(Bloomberg) -- The movie “Dark Waters” about the effect of deadly chemicals in West Virginia is “very damaging” for DuPont de Nemours Inc., Wall Street analysts at Fermium Research wrote in a report before its theatrical debut on November 22.
Analyst Frank Mitsch -- who watched a sneak preview -- thinks that “Dark Waters” will probably be a hit film and may cast a shadow over DuPont shares and the entire chemical industry. The movie focuses on DuPont and Chemours Co.’s already-settled litigation over perfluorooctanoic acid production.
DuPont’s shares fell as much as 2.7% on Friday in New York, while broader market inched higher.
“We can see a scenario where interest in DD from individual investors (85% institutional ownership according to Bloomberg) dissipates, though also a broader concern for the chemicals sector given the negative portrayal,” he added.
One positive, though, is that Chemours wasn’t mentioned at all during the movie, Mitsch said. The focus was solely on DuPont and it’s possible that the average moviegoer will likely “walk away disgusted” only with DuPont.
For their part, investors are probably more interested in DuPont due to the prospect for merger and acquisition activity. The company has been exploring the divestiture of assets, Mitsch wrote, and if a deal occurs it’s possible that the negatives from the movie may subside.
“Our hot-take is the film is a near-term negative, but when the first blockbuster M&A transaction gets announced, it may fade into the background,” the analyst concluded.
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