Qnity receives bullish backing from Goldman Sachs, BMO amid spinoff from DuPont

[Scientist Fabricating Sensors On Semiconductor Wafer]
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Qnity Electronics (NYSE: NYSE:Q.WI [https://seekingalpha.com/symbol/Q.WI]), the newly independent semiconductor and electronics materials company spun off from chemical maker DuPont (NYSE:DD [https://seekingalpha.com/symbol/DD]), debuted this week to upbeat coverage from both Goldman Sachs and BMO Capital Markets, with each firm initiating the stock at a Buy/Outperform rating.

Both reports highlight Qnity’s strong positioning in a tightening but strategically vital corner of the semiconductor value chain: the consumables and advanced materials segment.

The analysts cited dual growth levers: a cyclical rebound in wafer starts and secular increases in materials content per wafer at advanced process nodes.

As part of the spinoff, Qnity this week started what's known as “when-issued” trading and is expected to begin “regular way” trading on Nov. 3 under the symbol (Q), according to [https://finance.yahoo.com/news/dupont-board-directors-approves-qnity-200500974.html] the company.

NEW PURE-PLAY LEADER IN SEMICONDUCTOR MATERIALS

Goldman Sachs analysts led by James Schneider called Qnity “a fully independent semiconductor materials business…well-positioned to benefit from a dual-pronged growth algorithm tied to both a cyclical recovery in wafer starts, plus secular expansion in material content at advanced process nodes.”

The firm expects wafer shipments (measured in MSI) to accelerate through 2026, supported by stabilizing analog markets and investment in artificial intelligence and high-performance computing infrastructure.

BMO analysts led by Bhavesh Lodaya likewise described Qnity as “the leading pure-play, yet diversified, electronics materials company” with peer-leading margins and exposure to high-growth megatrends such as AI, HPC, 5G connectivity and automotive electrification.

The analysts projected 7%-9% annual growth in earnings before interest, taxes, depreciation and amortization and low-teens earnings-per-share growth, driven by rising demand for advanced packaging and thermal management solutions.

END-MARKET AND PRODUCT DIVERSIFICATION

Both reports emphasized Qnity’s breadth across the electronics ecosystem. About 50% of revenue comes from chip fabrication, with the remainder spread across interconnect materials, advanced packaging, PCB manufacturing and display assembly.

Goldman highlighted that as device architectures grow more complex, the “processing material multiplier effect,” meaning more layers and steps per wafer, should let Qnity outperform wafer volume growth even in slower macro conditions.

BMO analysts added that approximately 90% of Qnity’s portfolio consists of unit-driven consumables, which are less volatile than semiconductor equipment sales and create recurring revenue tied to wafer production rather than capital spending. Qnity’s average 35-year customer relationships and deep integration into manufacturing processes as key competitive moats, they said.

REGIONAL STRATEGY AND RISK FACTORS

Both banks pointed to Qnity’s “local-for-local” supply chain model, producing more than 80% of its materials within the same regions they serve, as a buffer against tariff and export-control disruptions. However, about one-third of sales come from China, which analysts described as a potential overhang amid geopolitical tensions and inventory normalization in trailing-edge applications.

Goldman noted that this concentration “does not fully insulate Qnity from a potential slowdown” but credited the company for regionalizing sourcing and production. BMO also cautioned that PFAS-related legacy liabilities inherited from DuPont (NYSE:DD [https://seekingalpha.com/symbol/DD]) could present longer-term financial uncertainty.

FINANCIAL OUTLOOK AND VALUATION

Goldman forecasts operating earnings of $2.50 a share in 2025, $2.90 in 2026 and $3.40 in 2027, implying a three-year compound annual growth rate of roughly 7% in revenue and an ebitda margin expansion from 30.5% to 31.6%.

BMO’s projections are broadly similar, with earnings rising from $2.60 a share in 2025 to $3.34 in 2027 and a free cash flow yield around 3%, underpinned by lower capital intensity and net leverage trending below 2 times by 2026.

At their respective price targets -- $110 at Goldman and $109 at BMO -- both firms value Qnity at roughly 32 to 36 times forward earnings or about 16 times 2027 estimated ebitda, in line with peers like Entegris (ENTG [https://seekingalpha.com/symbol/ENTG]) but reflecting a modest discount to account for spin-off execution risk.

ANALYST CONSENSUS: EARLY DAYS, BUT HIGH CONVICTION

Both banks see the spin as a catalyst unlocking value long overshadowed within DuPont’s (NYSE:DD [https://seekingalpha.com/symbol/DD]) diversified portfolio.

Goldman’s Schneider wrote that Qnity’s exposure to AI data center buildouts, advanced packaging and semiconductor yield improvement “creates a strong cyclical and structural backdrop.”

BMO’s Lodaya added that “the combination of secular tailwinds, a sticky consumables business model, and unshackled management positions Qnity for sustained value creation.”

Together, the early analyst coverage paints Qnity as a steady compounder in one of the most strategically critical, yet often overlooked, corners of the semiconductor supply chain.

MORE ON DUPONT, QNITY ELECTRONICS, INC.

* DuPont: Buy Peers Instead; Here Is Why [https://seekingalpha.com/article/4833378-dupont-buy-peers-instead-here-is-why]
* DuPont De Nemours, Inc. (DD) 2025 Investor Day Call (Transcript) [https://seekingalpha.com/article/4824122-dupont-de-nemours-inc-dd-2025-investor-day-call-transcript]
* DuPont de Nemours, Inc. (DD) Analyst/Investor Day - Slideshow [https://seekingalpha.com/article/4824095-dupont-de-nemours-inc-dd-analyst-investor-day-slideshow]
* DuPont board approves spin-off of electronics business Qnity [https://seekingalpha.com/news/4504740-dupont-board-approves-spin-off-of-electronics-business-qnity]
* Goldman Sachs is said to lead $3.75B debt package for Arclin’s DuPont deal [https://seekingalpha.com/news/4501126-goldman-sachs-is-said-to-lead-3_75b-debt-package-for-arclin-s-dupont-deal]