Bank of America Securities analyst Salvator Tiano has reiterated their neutral stance on IFF stock, giving a Hold rating on May 8.
Salvator Tiano has given his Hold rating due to a combination of factors including International Flavors & Fragrances’ (IFF) strong performance in the first quarter, which led to a higher earnings estimate and a price objective (PO) increase from $87 to $99. The company’s organic growth and improved margin outlook for 2024 are encouraging, with adjustments in earnings per share (EPS) and a valuation multiple that is now one standard deviation above the 10-year average. Additionally, strategic moves like the dividend cut and the divestiture of the Pharma segment are seen as positive steps towards achieving the company’s leverage targets. These factors contribute to a more optimistic long-term outlook for the company, which is reflected in the raised terminal growth rate in Tiano’s discounted cash flow (DCF) analysis.
However, Tiano remains cautious with a Neutral rating, as the recent run-up in shares suggests that the current valuation fairly reflects the company’s prospects, leaving limited room for significant upside. He raises concerns about the weak underlying consumer demand for food and household products, with the exception of fine fragrances. In the United States, which accounts for roughly 30% of IFF’s sales, there is evidence of continued volume declines in key product categories. This indicates potential challenges ahead, despite the positive developments and conservative guidance provided by the company. Tiano’s balanced view suggests that while IFF is moving in the right direction, current market prices already account for these improvements, leading to his Hold recommendation.
In another report released on May 8, Barclays also maintained a Hold rating on the stock with a $93.00 price target.
IFF’s price has also changed moderately for the past six months – from $71.540 to $97.060, which is a 35.67% increase.
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International Flavors & Fragrances (IFF) Company Description:
International Flavors & Fragrances, Inc. engages in the manufacture and supply of flavors and fragrances used in the food, beverage, personal care, and household products industries. It operates through the following segments: Taste, Scent, and Frutarom. The Taste segment is sold to the food and beverage industries for use in consumer products such as prepared foods, beverages, dairy, food, and sweet products. The Scent segment comprises of fragrance compounds, fragrance ingredients, and cosmetic active ingredients. The Frutarom segment creates and manufactures a naturals-focused suite of flavor compounds, functional foods and specialty fine ingredients, largely targeting small, local and regional customers. The company was founded in 1833 and is headquartered in New York, NY.
